DBA Thesis - What really happens when buyers and sellers ...
UNIVERSITY OF GLAMORGAN
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BUSINESS SCHOOL
NEGOTIATIONS BETWEEN BUYERS AND SELLERS
What really happens when buyers and sellers negotiate?
“In business as in life – You don’t get what you deserve,
You get what you negotiate”
Dr. Chester L. Karrass (1996)
STEPHEN GRANT HUBBARD
05106869
A submission presented in partial fulfilment of the requirements
of the University of Glamorgan/Prifysgol Mogannwg
for the degree of Doctor of Business Administration
July 2013
Table of Contents
Candidate’s Declaration Form 8
Approval for Submission of a Thesis 9
Certificate of Research 10
Abstract 11
Acknowledgments 12
CHAPTER 1: INTRODUCTION 13
1. Introduction 13
1.1 Aims and Scope of Research 14
1.2 Motivation to conduct this research 16
1.3 Context 16
1.3.1 A DBA not a PhD 16
1.3.2 UK or global scope 17
1.3.3 Status and contribution of IPSERA and The Journal of Purchasing and Supply Management 17
1.3.4 Terminology 18
1.4 Contributions to Knowledge and Practice 18
1.5 Chapter Summaries 18
1.5.1 Chapter 2: Literature Review 18
1.5.2 Chapter 3: Research Methodology and Methods 19
1.5.3 Chapter 4: Findings and Observations 20
1.5.4 Chapter 5: Discussion of Findings 20
1.5.5 Chapter 6: Conclusions 20
CHAPTER 2: LITERATURE REVIEW 22
2. Introduction and chapter overview 22
2.1 Structured thematic search strategy 22
2.2 Background 22
2.2.1 Negotiation research in Purchasing and Supply Management 22
2.3 Definitions of negotiation 24
2.4 Negotiation Approaches 26
2.4.1 Integrative versus distributive negotiation approaches 26
2.5 Emotional Intelligence 30
2.5.1 Interpersonal Chemistry 30
2.5.2 Trust 32
2.5.3 Integrity and deception 34
2.5.4 Respect, Face and Ego 35
2.5.5 Female negotiators 38
2.6 Persuasion Techniques 40
2.6.1 Bargaining 42
2.6.1.1 Extreme initial offers 43
2.6.2 Logical persuasion 44
2.6.3 Power and coercion 45
2.6.3.1 Power Ploys 52
2.6.3.2 Best Alternative To Negotiated Agreement; Alternative To Negotiated Agreement; and Realistic Alternative To Negotiated Agreement (BATNA, ATNA and RATNA) 52
2.6.4 Emotion 54
2.6.5 Understanding the other party’s genuine objectives 55
2.7 Other factors influencing negotiations 55
2.7.1.1 Reciprocity 55
2.8 Summary 58
CHAPTER 3: RESEARCH METHODOLOGY AND METHODS 60
3. Introduction and chapter overview 60
3.1 Philosophical assumptions, research strategies and methods 60
3.1.1 Philosophies of research 60
3.1.2 Ontology and Epistemology 63
3.1.3 Validity and Reliability in Qualitative Research 65
3.2 Methodological choice for this study 67
3.2.1 The concept of the research 67
3.2.2 Research Design 67
3.2.3 The rationale for the interview methods 68
3.2.4 The rationale for the survey (questionnaire) methods 68
3.2.5 Reliability 69
3.2.6 The relationship between research objectives and research methods 69
3.3 Selected Research Design 69
3.3.1 Considerations 69
3.3.2 Qualitative Study 69
3.3.3 Overview of Adopted Research Approach 70
3.3.4 Researcher’s Interview Experience 71
3.3.5 Selection of Actors 71
3.4 Phase 1: The Interviews 72
3.4.1 Aims 72
3.4.2 Design 72
3.4.2.1 Phase 1 - Interviews 72
3.4.2.2 Phase 2 – Questionnaires 75
3.4.2.3 Phase 3 - Presentations of Initial Findings and Feedback 77
3.5 Ethical considerations 78
3.5.1 Consent 78
3.5.2 Actors rights 78
3.6 Summary 79
CHAPTER 4: FINDINGS AND OBSERVATIONS 81
4. Introduction and chapter overview 81
4.1 Findings from Interviews 82
4.1.1 Profiles of actors 82
4.1.1.1 Buyers and Sellers 83
4.1.1.2 Years experience as professional negotiator 84
4.1.1.3 Diversity of actors 84
4.2 Main findings of interviews 85
4.2.1 Theme 1: Integrative Negotiations 85
4.2.1.1 Q 5 “Have you heard of negotiations described as integrative and distributive?” 85
4.2.2 Theme 2: Use of Power and Coercion 89
4.2.2.1 “Tell me about the power relationship in negotiations, based on your personal experience - what gives a buyer or seller power in a negotiation?” 89
4.2.2.2 Removal of a negotiating opponent 90
4.2.2.3 Q 4b “To what extent is the balance of power based on the perception in the minds of the negotiators?” 90
4.2.2.4 Q 4c “Are you familiar with the term ‘BATNA’” 90
4.2.2.5 Q 4d “In your experience how often does a negotiator have a real alternative to a poor negotiated agreement? (ATNA)” 90
4.2.2.6 Use and abuse of power - the "fait accompli" / hiding behind policy or rules 92
4.2.3 Theme 3: Interpersonal ‘chemistry’ 92
4.2.3.1 Research the negotiator(s) on the other party’s team 93
4.2.3.2 Disrespect or dislike for their opponent 93
4.2.3.3 Q 6 “Can the interpersonal behaviours involved in a negotiation be separated from the subject matter being negotiated?” 94
4.2.4 Selling negotiators’ personal motivations 95
4.2.5 Ethics, Trust and Integrity 97
4.2.5.1 Q 7 “In your view how important is personal integrity in negotiations?” 97
4.2.5.2 Q 7a “Do you ever deliberately deceive your opponent in negotiations?” 97
4.2.5.3 Q 8 Have you experience of 'golf course' deals being made outside the normal organisational framework? 98
4.2.5.4 Deliberate deception 98
4.2.6 Theme 4: Persuasion Techniques 99
4.2.6.1 “What persuasion techniques exist in negotiations?” 99
Do you use the following techniques: 100
4.2.7 i Logical persuasion 100
4.2.8 ii Bargaining 102
4.2.9 iii Use of power and coercion – see separate section 4.2.2 Theme 2 102
4.2.10 iv Emotion 102
4.2.11 v Compromise 103
4.2.12 vi Understanding the other party’s goals and objectives 103
4.2.13 vii Promises 104
4.2.14 Theoretical techniques 105
4.3 Other findings from interviews 105
4.3.1 Effective Negotiators 105
4.3.2 Female negotiators 108
4.3.3 Deadlines, fatigue and exhaustion 109
4.3.4 Contracts 109
4.3.4.1 Q 9 “How important is the written contract when agreement has been reached?” 109
4.3.4.2 Q 10 “How common is it for major deals not to be documented in formal contracts?” 110
4.3.4.3 Q 11 “Is it true that the contract is only important when things go wrong?” 110
4.3.4.4 The ‘Sweeper clause’ 110
4.3.4.5 ‘Purposive contracts’ 111
4.3.4.6 Minimise Legal involvement 112
4.3.4.7 Unwritten contracts 112
4.3.5 Major Outsource Contracts 112
4.3.5.1 First year 112
4.3.5.2 Failure to manage 112
4.3.6 Lack of negotiation expertise and experience 113
4.3.7 Global database of third party suppliers 113
4.3.8 Dealing with major issues 113
4.3.9 Linkage of issues 113
4.3.10 Fear of retaliation 114
4.3.11 Feigned stupidity and persistence 114
4.3.12 Culture of the organisation or sector 114
4.3.13 Language obfuscation 114
4.3.13.1 Lower level of reporting 115
4.3.14 Negotiation Team Structure 115
4.3.15 Reviewing lessons learned 115
4.3.16 Negotiation, a ‘seat of the pants’ activity, unplanned and disowned even in the most respected leading global companies 115
4.4 Phase 2 – Findings from questionnaires 116
4.4.1 Questionnaire 1 - Perception of the importance of effective negotiator characteristics 116
4.4.1.1 Soft skills 118
4.4.2 Questionnaire 2 - Negotiator perception preferences 119
4.5 Summary of findings 119
4.5.1 Profiles of Actors 119
4.5.2 Theme 1: Integrative Negotiations 119
4.5.3 Theme 2: Use of Power and Coercion 121
4.5.4 Theme 3: Interpersonal ‘chemistry’ between negotiators 122
4.5.4.1 Ethics, Trust and Integrity 122
4.5.5 Theme 4: Persuasion Techniques 123
4.5.6 Other findings from interviews 124
4.5.6.1 Behaviours of effective negotiators 124
CHAPTER 5: DISCUSSION OF FINDINGS 126
5. Introduction, chapter overview, aims and objectives 126
5.1 Additional analysis 126
5.2 Theme 1: Integrative Negotiations 126
5.3 Theme 2: Use of Power and Coercion 128
5.3.1 Test of the Power Balance between the Parties 129
5.3.2 Control of contract drafts 130
5.3.3 Removal of a negotiating opponent 130
5.3.4 Database of commercial interactions 130
5.3.5 The "fait accompli" / hiding behind policy or rules 131
5.4 Theme 3: Interpersonal ‘chemistry’ 131
5.4.1 Test of the Relationship between the Parties 133
5.4.2 Two critical variables 135
5.4.3 Integrity 135
5.4.4 Personal motivations 136
5.5 Theme 4: Persuasion Techniques 137
5.5.1 Logical Persuasion 138
5.5.2 Bargaining 139
5.5.3 Emotion 139
5.5.4 Compromise 140
5.5.5 Revealing two new Persuasion Techniques 140
5.5.6 Understanding the other party’s goals and objectives 141
5.5.7 Promises 141
5.6 Female negotiators 142
5.7 Discussion of other findings 142
5.7.1 Planning and Preparation 142
5.7.2 Behaviours, skills and characteristics of effective negotiators 144
5.7.3 Focus on the end result 147
5.7.4 Questionnaire 1 - Perception of the importance of effective negotiator characteristics 147
5.7.5 Comparison with earlier studies of effective negotiator characteristics 147
5.7.6 Linkage of issues 148
5.7.7 Response options 148
5.7.8 Contracts - The ‘sweeper’ clause 148
5.7.9 Questionnaire 2 - Negotiator perception preferences 148
5.7.10 Detached observer 149
5.7.11 Language obfuscation 150
5.8 Summary – Negotiation principles 151
CHAPTER 6: CONCLUSIONS 154
6. Introduction, chapter overview, aims and objectives 154
6.1 Conclusions 154
6.1.1 Neglect of negotiation as a subject 154
6.1.2 Responses to the research questions 154
6.1.3 Integrative negotiations 155
6.1.4 Power 155
6.1.5 Interpersonal chemistry 156
6.1.6 Integrity and deceit 157
6.1.7 Persuasion techniques 158
6.1.8 Personal motivations 159
6.1.9 Importance of bargaining 159
6.2 Other findings 160
6.2.1 Behaviours of successful negotiators vs average negotiators 160
6.2.2 Importance of preparation to successful negotiators? 160
6.2.3 Importance of contracts between buyers and sellers? 161
6.2.4 Four response options 161
6.3 Contributions to knowledge and practice 161
6.4 Importance of this research 161
6.5 Implications of findings for practitioners 162
6.6 Dissemination of new knowledge 162
6.7 Research limitations 163
6.7.1 Sample size 163
6.7.2 Sample of convenience 163
6.7.3 Questionnaire format 163
6.7.4 Geographic scope 163
6.7.5 Responses to Questionnaires 164
6.7.6 Exploratory interviews 164
6.8 Recommendations for future research 164
6.8.1 Negotiations in different circumstances 164
6.8.2 Personality types 164
6.8.3 Investigate the relationship between power and negotiation 165
6.8.4 Develop a tool for the selection of negotiators 165
6.8.5 Quantitative study 165
6.9 Summary 165
APPENDIX 1: Core Interview Negotiation Questions 181
APPENDIX 2: Agreement of Informed Consent 186
APPENDIX 3: Non-specialist ethical guidelines for research 187
APPENDIX 4: IPSERA Code of ethical research 194
REFERENCES 198
List of Figures
Figure 2.1: Porter’s Five Forces of Competition 46
Figure 2.2: Power Dominance Model 50
Figure 3.1: Deductive research process 63
Figure 3.2: Inductive research process 63
Figure 3.3: Subjectivist to Objectivist Approaches 65
Figure 4.1: Actors’ years experience as professional negotiator 84
Figure 4.2: Industry Sector of Actors 85
Figure 4.3: Sources of Power 89
Figure 4.4: Preferred persuasion techniques 100
Figure 4.5: Perceived characteristics of effective negotiators – interview responses 107
Figure 4.6: Characteristics of effective negotiators – questionnaire responses 117
Figure 4.7: Characteristics of effective negotiators – interview and questionnaire responses compared 118
Figure 4.8: Negotiators’ Perception Preferences 120
Figure 5.1: Selling negotiators’ possible personal motivations 136
Figure 5.2: Persuasion techniques – traditional 137
Figure 5.3: Seven Persuasion techniques 140
Figure 5.4: Traditional topics for research 143
Figure 5.5: Comprehensive topics for research 143
Figure 5.6: Characteristics of effective negotiators ranked in importance from different studies 146
Figure 5.7: Non-preferred Negotiation Preferences from Questionnaire 2 151
List of Tables
Table 2.1: Sources of power 47
Table 4.1: Overview of Research Actors 83
Table 6.0 GLOSSARY OF TERMS AND ACRONYMS 167
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Candidate’s Declaration Form
UNIVERSITY OF GLAMORGAN
PRIFYSGOL MORGANNWG
(This form should be typewritten)
Candidate’s Declaration Form
Note: This form must be submitted to the University with the candidate’s thesis (10.5 of the Regulations refers)
Name of Candidate: Stephen Grant Hubbard
Degree for which thesis is submitted: Doctor of Business Administration
1. Statement of advanced studies undertaken in connection with the programme of research (regulation 4.1 refers)
Negotiations between Buyers and Sellers
What really happens when buyers and sellers negotiate?
2. Concurrent registration for two or more academic awards (regulation 4.8 refers)
I declare that while registered as a candidate for the University of Glamorgan’s research degree, I have not been a registered candidate or enrolled student for another award of the University or other academic or professional institution.
3. Material submitted for another award
I declare that no material contained in the thesis has been used in any other submission for any academic award.
Signature of candidate: ..................................................... Date:
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Approval for Submission of a Thesis
(Form R10)
Student:…………………… Stephen Grant Hubbard
Award:………………………Doctor of Business Administration
This is to confirm that a thesis entitled:
Negotiations between buyers and sellers
- what really happens when buyers and sellers negotiate?
has been approved for submission by the student's supervisory team and can therefore be forwarded to the examiners.
Signed ………………………………………
Director of Studies
Date ………………………………………
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Certificate of Research
(Form R11)
This is to certify that, except where specific reference is made, the work described in this thesis is the result of the candidate’s research. Neither this thesis, nor any part of it, has been presented, or is currently submitted, in candidature for any degree at any other University.
Signed ………………………………………
Candidate
Date ………………………………….......
Signed ………………………………………
Director of Studies
Date ………………………………………
Abstract
The aim of this thesis is to extend the current knowledge to understand what happens when buyers and sellers negotiate. The review of literature considers the processes, approaches, relationships and behaviours of negotiators in the current status regarding negotiations between buyers and sellers.
The major justification for this work is that the dominant concepts and theories developed in the academic literature are not supported by empirical evidence from professional negotiators in purchasing and sales. Previous research has mainly been conducted using either simulated negotiations to try to model or predict what happens in negotiation situations, or viewing the subject from a sales and marketing perspective. Minimal research has been identified concerned with what professional buyers, performing the role of negotiating with salespeople, actually do, and what motivates them to do it. The literature on negotiation specifically for the buyer from the 1960s was very limited indeed, although several general purchasing texts included something on the subject.
The research method adopted for this thesis is a qualitative study. Twenty in-depth semi-structured interviews were held with senior negotiators, thirteen of whom were buyers, three were involved in both buying and selling, and four of whom were sellers.
Following the interviews, two questionnaires were sent to all of the actors based on well established instruments that have been used throughout the history of negotiation in the emerging procurement profession. The first questionnaire gathered data on the perceptions of the actors on the relative importance of thirty-four qualitative characteristics of negotiators, and the second questionnaire determined their opinions relating to ten pairs of binary variables relating to how negotiators behave.
The theoretical contribution of this thesis to knowledge is via a number of new principles of negotiation. These principles represent the key underpinning foundations of negotiations between buyers and sellers from the buying negotiator’s position.
The contribution to practice is to enable an enhanced understanding to the practice of negotiation between buyers and sellers. This is to be achieved via the new principles of negotiation, which may enable practitioners to improve their negotiation outcomes, based on what works in practice for senior negotiators.
This research is important because negotiations between buyers and sellers has been neglected in the purchasing and supply management (P&SM) field for over four decades since Chester Karrass completed his doctoral research in 1968. It is also important because it is the first research to bring empirical data from practising negotiators into the body of knowledge on the subject.
Acknowledgments
Firstly I thank my wife Marilyn, whose support throughout this project, and the other major projects in my life, has been more than I could have wished for.
Second, a huge debt of gratitude is due to my Director of Studies, Professor Neil Marriott, who has continued to support me over seven years with encouragement, help and guidance despite having moved on from Glamorgan not long after I started this research.
Third, I would like to acknowledge my role models and mentors in procurement, Mike Speed, Ralph Bollington, Ken Morris, Ken Lyndsell, John Rice, Dr. Brian Farrington and the late Dr. David Farmer. They gave me my ‘mountain to climb’, and the inspiration to go and climb it, for which I am indebted. More recently in this regard I am particularly indebted to John Ramsay, who, as the lone voice in the academic Purchasing and Supply Management (P&SM) community for many years, querying why the subject of negotiation has been neglected by this community, provided me the inspiration and motivation to embark upon this research.
Fourth, I acknowledge my tutors at the University of Glamorgan, who have opened up for me the world of academia. Duncan Lewis, Rami Djebarni, Robin Croft, Mike Sheehan, and more recently Andrew Thomas and Paul Jones all helped to make this journey an enjoyable one. For this I am grateful.
Fifth, I could not have done this research without my research actors, negotiators who have shared freely of their vast experience and knowledge of the subject, gained over many years as practitioners in the real world, negotiating commercial contracts as buyers or sellers or both. Their generosity with their time and their enthusiasm for my research has been superb. I thank them greatly for what turned out to be fascinating insights into their worlds. An unexpected bonus was that the interviews turned out to be highly enjoyable.
Sixth, I am most grateful to my good friend of many years, Gina Isaac, for her dedicated and professional transcription of the interviews.
Finally, I am most grateful to my good friend and former colleague Jean-Michel Bouhier for his expert assistance in the presentation of some of my findings.
CHAPTER 1: INTRODUCTION
Negotiation is:
“one of the most demanding and sophisticated activities carried out by all purchasing functions in the management of competitive and co-operative buyer-supplier relationships alike. It is an essential element in the generation of all forms of Sustainable Competitive Advantage flowing from the function”
(2007, p.85).
1. Introduction
This introduction presents a background to the topic, justification for this work, clear and explicit aims and objectives and an overview of the structure of the dissertation.
Early academic study of negotiations between buyers and sellers from the buyer’s perspective was conducted by Karrass (1970) at the University of Southern California. In his research he sought to investigate the roles of power and negotiator skill by way of a series of experiments in which skilled and less skilled negotiators were compared. Academic study of negotiation was advanced considerably by a few researchers at the Harvard Business School in the late 1970s. The work that resulted was published in numerous academic journal papers, and culminated in two landmark books, ‘Getting to Yes’ (Fisher and Ury, 1981) and ‘The Art and Science of Negotiation’ (Raiffa, 1982), upon which much of the subsequent literature is based. Many of the ideas within these books found their way into the literature on negotiations in many fields, including those between buyers and sellers.
Bazerman et al (2000) identify Raiffa’s seminal 1982 work as the key turning point in the research on negotiation, but make no mention of Fisher and Ury’s equally well-known and best-selling 1981 text ‘Getting to Yes’. Conversely, Thompson and Leonardelli (2004) claim Fisher and Ury’s book as the ‘big bang’ in negotiation research. It is clear from references in many studies on negotiation that Fisher and Ury (1981) and Raiffa (1982) created landmarks in the history of research into negotiation, and that Harvard Business School cultivated the majority of established researchers and authors in the subject, although they were more concerned with international political negotiations than commercial ones. However, none of this research was specifically related to negotiations in business or commerce, and certainly not to negotiations between buyers and sellers.
Whilst there has been considerable research into negotiation in a variety of fields including accountancy, human resource management, operations management, logistics, and particularly sales and marketing, where it has become a mainstream topic of research, the process of negotiation has been largely ignored by the Purchasing and Supply Field (Ramsay, 2007). Possibly one of the reasons for this is that from the outset of the International Purchasing & Supply Education and Research Association (IPSERA), Lamming stated that:
“It is not valid as a subject in its own right within the academic discipline of Purchasing and Supply, despite its important role in the practitioner’s ‘tool kit’.”
(Lamming, 1992 p.3) in (Ramsay, 2007, p.84)
This research is important because it is the first research into negotiations between buyers and sellers to bring empirical data from senior practising negotiators in a Business to Business (B2B) context into the body of knowledge on the subject.
1. Aims and Scope of Research
The purpose of this thesis is to review, primarily from a buyer’s perspective, the extant knowledge covering the practitioner’s view of negotiations in B2B contexts, identify some of the gaps in that knowledge, and attempt to fill those gaps. To this end it is necessary to understand the current theories surrounding negotiations between buyers and sellers as described in the extant literature, and also to assess through empirical research how much of this theory is supported by acting purchasing and sales negotiators. This involves evaluating the motivation and behaviour of professional buyers and sellers by asking them about their own perspectives.
In order to meet the aim, the thesis seeks to answer these research questions:
• Do ‘integrative’ negotiations really happen between buyers and sellers? If so, what is the nature of that collaboration?
• Who has the power in major negotiations between buyers and sellers? What factors determine the balance of power
• How important is the ‘interpersonal chemistry’ between buyers and sellers?
• What persuasion techniques do negotiators use?
The major justification for this work is that the dominant concepts and theories developed in the academic literature are not supported by empirical evidence from professional negotiators in purchasing and sales. Previous research has mainly been conducted using either simulated negotiations to try to model or predict what happens in negotiation situations (for example, Karrass (1968)), or viewing the subject from a sales and marketing perspective (Harwood, 2003). Little research has been identified concerned with what professional buyers, doing the job of negotiating with salespeople, actually do, and what motivates them to do it.
The literature on negotiation specifically for the buyer has been very limited indeed (Carlisle & Parker, 1989; Steele et al., 1989; Sheridan, 1990), although several general purchasing texts included something on the subject (Aljian, 1958; Baily & Farmer, 1968; Lysons, 1981; Syson, 1992).
It is surprising to learn that although the Chartered Institute of Purchasing and Supply (CIPS) has provided short training courses on negotiation for many years, it has only recently introduced a module on negotiation into its Graduate Diploma qualification (becoming effective from September 2006), although it did previously appear as a sub-topic within other modules such as ‘Tactics and Operations’. This means that until recently there was a limited syllabus covering negotiation for the purchasing profession for much of the developed and developing world (CIPS covers 154 countries that use CIPS courses for their purchasing education). It follows therefore that until recently there were no recommended dedicated text books covering the subject of negotiation for the CIPS qualifications for the purchasing profession. An official CIPS course book was produced to coincide with the new syllabus from September 2006 (Harwood, 2006) (a second edition was produced in 2009) and it is accompanied by another recommended ‘essential’ text, ‘Essentials of Negotiation’ (Lewicki et al. 1997).
The research covered in this dissertation places on record, both for the academic community and practitioners in the emerging profession, a series of insights that originate from practitioners, and therefore the work identifies with, and is endorsed by, practitioners. This enables the knowledge base to reflect how practitioners actually negotiate (in line with their experience), in contrast to the current knowledge base, which it is believed has been created in a vacuum with little or no practitioner input or involvement (Ramsay and Jackson, 2005).
2. Motivation to conduct this research
Following graduation with the MSc Procurement in 2003 the researcher became interested in the academic treatment of procurement related topics, and in particular negotiation. He was particularly intrigued by a paper by Ramsay and Jackson (2005) presented at the 2005 IPSERA conference at Archamps in France. This paper suggested that there was:
“An enormous gap between theory and practice; between the attitudes towards cooperation and competition that academics and consultants have been advocating for the last quarter of a century, and the way that practitioners have responded to that advocacy.”
The abstract of the paper describes how one of the authors accidentally uncovered ‘widespread practitioner resistance in buyers to the use of cooperative attitudes towards suppliers.’ The work focuses on the neglected process of buyer-supplier negotiations.
This was sufficient to inspire the researcher to enroll for the Doctor of Business Administration at University of Glamorgan later that same year in order to research the subject of negotiations between buyers and sellers.
3. Context
1. A DBA not a PhD
This thesis is contributory towards the degree of Doctor of Business Administration (DBA), as distinct from a Doctor of Philosophy (PhD). The primary difference is that the DBA candidate is a practising senior manager, and not an academic, the course is part time and delivered mainly via distance learning.
According to the Definitive Scheme Document (2005), the Glamorgan DBA is:
“a professional practice doctorate, concerned with researching real business and managerial issues via the critical review and systematic application of appropriate theories and research to professional practice. . . DBA students should not be confused with typical PhD candidates, instead DBA actors will be representative of senior managers and executives inside organisations who desire not only to make a contribution to knowledge but also a contribution to practice.”
The Association of Business Schools draft guidelines (September 2005) says:
“The DBA has a dual purpose – to make a contribution to both theory and practice in relation to business and management, and to develop professional practice through making a contribution to professional knowledge (reference to ESRC Guidelines, Section 3). The DBA therefore seeks not only to increase knowledge about practice but also to inform and impact on practice.”
Definitive Scheme Document (2005)
2. UK or global scope
The many references in this thesis to United Kingdom (UK) based authors and researchers, and the Chartered Institute of Purchasing & Supply (CIPS) may suggest that the scope is limited to the UK. This is not the case, and all searches for reference material for the Literature Review (Chapter 2) have been unrestricted to all sources.
However, the dominant role of CIPS in the development and dissemination of theory and practice on negotiation for the emerging purchasing and supply profession was acknowledged from the outset, with specific recognition of the role of the CIPS Levels 4, 5 and 6 modules on negotiation and influencing being taught to all procurement practitioners who pursue the CIPS qualification.
3. Status and contribution of IPSERA and The Journal of Purchasing and Supply Management
Three entities that are referred to throughout this thesis are inextricably and closely linked together: IPSERA (formerly the Purchasing and Supply Education and Research Group, or PSERG), owes its existence to the Institute of Purchasing and Supply, (IPS), which from 1992 was granted a Royal Charter and became the Chartered Institute of Purchasing and Supply, (CIPS) (Lamming, 2010). The Journal of Purchasing and Supply Management (formerly the European Journal of Purchasing and Supply Management) also owes its existence to CIPS, as the following background makes clear:
“It was very much the UK Institute of Purchasing and Supply (IPS, now CIPS, with its Royal Charter) that started the EJPSM, as part of their investment in academic development at the beginning of the 1990s. IPS Head of University Relationships, Dennis Jones, proposed the title and brokered the relationship with Elsevier - still the journal’s publishers.
(Lamming, 2010)
The following statement is quoted directly from the IPSERA website:
“IPSERA’s mission statement is:
‘IPSERA acts as a platform for academics and practitioners to exchange ideas, stimulate discussions and reflect on concepts, theories and educational forms and methods in an open and friendly atmosphere. The topics discussed and issues raised should one way or another improve the professional quality of those active in the field of purchasing and supply.’”
(IPSERA, 2011)
With regard to one of its stated objectives, the intention to change Purchasing Practice, IPSERA currently has no direct channel to influence practice. There exists an opportunity here to develop such a channel which could lead to a greater level of co-operation between academics and practitioners.
4. Terminology
Throughout the thesis the term ‘purchasing professional’ is used and taken to mean the job function of the professional buyer, including variations in common usage such as ‘procurement’, ‘sourcing’, ‘supply management’, and ‘supply chain management’, where they can reasonably be interpreted as having the same meaning.
The terms ‘collaborative’, ‘co-operative’, ‘integrative’, ‘win-win’, ‘mutual gains bargaining’ and ‘principled negotiation’ are all used and taken to mean the same approach to negotiation originating from Fisher and Ury’s (1981) ‘Getting to Yes’.
4. Contributions to Knowledge and Practice
As stated above, the DBA has a dual purpose – to make a contribution to both theory and practice in relation to business and management, and to develop professional practice through making a contribution to professional knowledge.
Through this research, several contributions are made to the existing body of knowledge of negotiations between buyers and sellers via the principles of negotiation developed from the research findings and the underpinning theories of negotiation identified in the literature review.
5. Chapter Summaries
1. Chapter 2: Literature Review
This chapter reviews and provides the context of the existing knowledge, in other words secondary data, around negotiations between buyers and sellers from the purchasing professional’s perspective. It analyses the current academic and practitioner situation regarding negotiating from primarily the buyer’s, but also the seller’s perspective, in business to business contexts. The current knowledge base is identified, and from each topic area questions arise relating to what really happens in negotiations between buyers and sellers.
2. Chapter 3: Research Methodology and Methods
The purpose of this chapter is to present a critical review of academic research theories and paradigms within the social sciences, and then present and debate the researcher’s own paradigm of research and theoretical orientation, with suitable methodological approaches, addressing the concerns of verification and validity in qualitative research. The chapter justifies the data collection methods employed for the empirical research in the light of the research questions.
The research method adopted for this thesis is a qualitative study, using an inductive approach. Through this process the initial interviews evolve from a series of semi-structured questions through the deliberate practice of allowing the actors to digress into other topics, and then pursuing these new ideas, incorporated into the questions in subsequent interviews. In this way revelations that emerged unprompted from interviews are captured in the findings.
Originally it was anticipated that around twelve to fifteen in-depth interviews with very senior and very experienced negotiators might provide sufficient data. However, the adopted method, of using the technique of theoretical sampling meant that it was not known to what extent the lines of questioning would evolve, or in what direction. Thirteen interviews were completed between 13th June and 29th October 2008. A further six interviews were completed between 6th January and 1st March 2009. It was always part of the methodology to seek and record feedback on the research as it was progressing, and this was enabled by two presentations of initial findings later in 2009, first via a presentation to 35 members of the CIPS Beds and Herts Branch on 7th July 2009 and later via a presentation to ten senior managers, trainers and consultants at Huthwaite International, Wentworth, Yorkshire, on 4th September 2009. Feedback from these interactive presentations was incorporated into the findings. Finally, the 20th interview took place with the most experienced and successful sales negotiator on 21st December 2009.
All of the twenty actors had ten years or more experience as professional negotiators, and six had more than twenty years experience. These two criteria are believed to give the sample data real value in practical research terms.
3. Chapter 4: Findings and Observations
This chapter presents the findings and observations from the primary data collected in the research. The findings from the interviews, the questionnaires and the feedback from the presentations of initial findings are then presented in order of the major themes covered, approaches to negotiation (integrative vs distributive), sources of power, interpersonal ‘chemistry’, including ethics and integrity, and persuasion techniques,
Other findings to emerge from the interviews included observations on language obfuscation, lack of negotiation expertise and experience at senior levels within some organisations, linkage of issues, fear of retaliation, and deliberate deception by negotiators.
4. Chapter 5: Discussion of Findings
In this chapter the findings from Chapter 4 are discussed and evaluated in conjunction with the underpinning theories identified from the literature review in order to synthesise the various theories into a series of principles of negotiation.
5. Chapter 6: Conclusions
This chapter summarises the findings of the research in answering the research questions. The conclusions of this research are summarised.
The contributions to knowledge and practice are stated: the contribution of this thesis to knowledge is in the principles of negotiation. The contribution to practice is also from these principles of negotiation, which enable an enhanced understanding to be brought to the practice of negotiation. Several of the principles of negotiation are different from what has previously been promulgated in the extant literature, and through established training and education courses, though not necessarily what is generally believed among practitioners.
This research is important because negotiations between buyers and sellers has been neglected in the purchasing and supply management (P&SM) field for over four decades since Chester Karrass completed his doctoral research in 1968. It is also important because it is the first research to bring empirical data from practising negotiators into the body of knowledge on the subject.
The research limitations are stated. Recommendations for future research are made.
Having identified the aims and objectives of this study the next chapter considers the existing literature to examine this subject area in detail.
CHAPTER 2: LITERATURE REVIEW
2. Introduction and chapter overview
This chapter reviews and contextualises the existing research into negotiations between buyers and sellers. It analyses the current academic and practitioner situation regarding negotiating from primarily a buyer’s, but also a seller’s perspective.
6. Structured thematic search strategy
The search strategy for the literature review comprised of a structured search on negotiation themes. These themes emerged from the literature on negotiation generated from the Harvard Business School, from the primarily academic authors and researchers associated with Purchasing & Supply Management (P&SM).
The scope of the search was not limited to negotiations between buyers and sellers, nor to business or commercial fields, nor in any way at all. All research in negotiations from every field was considered to be worthy of consideration.
7. Background
1. Negotiation research in Purchasing and Supply Management
There is a paucity of academic literature on the subject of negotiation between buyers and sellers (Ramsay, 2007), and such literature that exists is not sufficiently rigorous, primarily because it lacks external validity and is contextually limited. Much of the academic research into negotiations has taken place in different fields to the business-to-business context of the buyer-seller dyad. For example, much of the Harvard Business School research took place in the context of political negotiations between countries (Heritage, 1978, Fisher and Ury, 1981, Raiffa, 1982, Lax and Sebenius, 1986, Ury, 1991, Bazerman and Neale, 1992, Lewicki et al., 2006).
That negotiation is not regarded as a research subject in its own right within the academic discipline of purchasing and supply is an extraordinary conclusion, particularly when it had been researched over a long period of time by so many other academic disciplines including accountancy, human resource management, operations management, logistics, and sales and marketing. This neglect of negotiation as a subject is not a recent phenomenon. Farmer (1970) identified negotiation as one of the most important and fundamental skills for business managers and could not understand why it was neglected in the training agenda of most organisations.
Lamming (1992) in (Ramsay, 2007) stated that:
“Negotiation . . . is not valid as a subject in its own right within the academic discipline of Purchasing and Supply, despite its important role in the practitioner’s ‘tool kit’”.
However, the difference was that, in those early days, negotiation had been simply overlooked in the scope of training within most organisations, whereas Lamming’s statement in 1992 was a deliberate decision to exclude the subject of negotiation from future research in purchasing and supply. When Lamming surveyed the spectrum that comprised the automotive industry as studied in the second half of the 1980s (Womack et al., 1990) in his groundbreaking work (Lamming, 1993) he dismissed the existing literature on negotiation in one short paragraph (p.140) as being presumptuous in treating negotiation as “the means whereby the ‘active’ buyer gains control over the ‘passive’ sales representative”. He applies this statement to five works that he labels as traditional purchasing literature (England, 1970, Lee and Dobler, 1971, Webster and Wind, 1972, Sheth, 1973, Westing et al., 1976). This is made in the context of repeated transactions between selling and buying companies having only recently been classified as ‘relationships’. Perhaps herein lies a clue as to why Lamming considered negotiation a subject unworthy of being studied in its own right.
Farmer (1997) published a retrospective paper in which he reviewed the fundamentals of the intellectual framework in which purchasing and supply research had been conducted and tried to predict where research should be directed in the future. Unfortunately, the opportunity to include the subject of negotiation was missed although it was identified as around 20% of the traditional purchasing role, and around 10% of the ‘new role’ as identified in the study (Smith, 1995). Farmer did not mention the subject once. Smith (1995) had identified that negotiation in the traditional model was believed to be solely concerned with price, whereas in the new role of purchasing management of the mid 1990s, it was no longer limited to this one aspect. A more recent analysis of research (Zheng et al., 2007) into the future of purchasing and supply management did not even contain the word ‘negotiation’, and this supports Ramsay’s conclusion that negotiation as a subject area has been generally absent from the academic literature to date. Approaches to buyer-seller negotiations by buyers and sellers have often been described as both sides of the same coin (Campbell, 1997) as though the approaches are similar and have much in common. Indeed, Olsen and Ellram (1997 p.221) based their study “on the premise that purchasing and marketing are essentially mirror images in terms of their processes, with each focusing on buyer-supplier relationships from a different perspective.”
This literature review seeks to establish which of the existing work has and which has not been grounded in the behaviours of practitioners in the field and finds that there is a notable absence of evidence from the practitioner community in the academic literature.
8. Definitions of negotiation
There is no agreed definition of negotiation among researchers. Harwood (2003) identified forty definitions with different characteristics including the existence of agreement and conflict, the bargaining process, exchange of information, techniques of influence and persuasion, and capability of the parties to reach agreement. The Shorter Oxford English Dictionary states that the word ‘negotiate’ is derived from the Latin ‘negotiari’, to carry on business, and ‘negotium’, business, and it is defined as:
“1. a. To confer (with another) for the purpose of arranging some matter by mutual agreement; to discuss a matter with a view to a settlement or compromise.
b. To traffic.”
(Shorter Oxford English Dictionary, 1980)
and ‘negotiation’ as:
“1. a. A business transaction
b. Trading, traffic.”
(Shorter Oxford English Dictionary, 1980)
Harwood suggests three different definitions for the CIPS graduate diploma level 4 course book on negotiation (Harwood, 2006):
“A motivated process of information exchange between or among individuals, groups, organisations, communities, societies and supranational systems with the goal of reaching agreement about certain joint or reciprocal acts”
(Tracey, 1987) in Harwood (Harwood, 2006, p.2)
and:
“[negotiation is a] formal process that occurs when parties are trying to find a mutually acceptable solution to a complex conflict”
(Lewicki et al., 2003a) in Harwood (Harwood, 2006, p.3)
and:
“[Negotiation is] any form of verbal communication, direct or indirect, whereby parties to a conflict of interest discuss, without resort to arbitration or other judicial processes, the form of any joint action which they might take to manage a dispute between them. Bargaining is the process of negotiating for agreement.”
(Morley and Stephenson, 1977 p.26 ) in Harwood (Harwood, 2006 p.3)
Kennedy (1998a, p.5) gives a ‘behavioural’ definition of negotiation:
“Negotiation is a process by which we search for terms to obtain what we want from somebody who wants something from us.”
The above addresses the point that a negotiation can only develop between two parties that both want something from each other.
Steele (1999)developed a definition of negotiation which has stood the test of time:
“A process through which parties move from their initially divergent positions to a point where agreement may be reached”
(Steele and Beasor, 1999, p.3) unaltered from Steele et. al. (Steele et al., 1989 p.3)
There is one definition that contemplates that the opportunities for negotiated agreement may be worse than no agreement at all. This is significant from the buyer’s perspective, because from a seller’s viewpoint, when all of their resource is devoted to achieving a sale, there can be reluctance to contemplate the possibility of no deal being better than any deal at all, no matter how costly or unprofitable for the organisation. However, this is not the buyer’s only dilemma. Very often, there will be other individuals within his or her own organisation that will be unable to contemplate a ‘no deal’ outcome and they may be positioned such that they can only contemplate a poor deal rather than no deal at all. In these circumstances there is no such thing as an unacceptable deal, even though the cost could be significant. Taking this point from Neale and Bazerman’s (1985, p.42) definition and adding it to a combination of Kennedy’s 1998 definition and Steele et al’s (1989, p.3) definition provides the researcher’s own definition that is comprehensive in the context of the buyer-seller relationship:
“The process by which we search for the terms to obtain what we want from somebody who wants something from us, to a point where a good agreement is reached. In some cases, no agreement is better than reaching an agreement that is not in the negotiators’ best interests.”
The next section goes on to review different approaches to negotiation.
9. Negotiation Approaches
Kennedy (1998a, p.xii) states that there are three main approaches to negotiation:
“1. negotiation as a phased behavioural process;
2. negotiation as a streetwise manipulative game;
3. negotiation as a search for a rational solution.”
Kennedy (1998a) adds that:
“There are other approaches too, such as academic works on game theory, economics, social anthropology, social psychology and history that have contributed to our understanding of negotiation.”
However, these main approaches were not adopted by the textbooks used for the teaching of negotiation to purchasing practitioners. For example Baily et. al. (1994), do not mention any specific approaches, Lysons and Farrington (2006), only refer to two opposing approaches, adversarial or collaborative, or Saunders (1994), who does not mention the subject of negotiation at all per se, but instead quotes Partnership Sourcing Ltd. throughout the chapter on strategic management of supplier relationships.
1. Integrative versus distributive negotiation approaches
Conventional wisdom has evolved to have purchasing people believe that there are two types of negotiations, distributive and integrative, and that these labels may be applied across all negotiations including those between buyers and sellers. Ramsay notes that:
“The fashion for talking about partnerships and win-win negotiating is now firmly established . . .
Indeed, the fashion is now so deeply entrenched that I think it reasonable to claim that there is a dominant discourse in the purchasing field that assumes that the benefits of greater co-operation and partnerships outweigh the costs. There would be nothing wrong with this state of affairs but for the fact that the empirical work supporting this assumption is, to say the least, thin on the ground.”
(Ramsay, 2003, p.28)
The two-option model of integrative versus distributive approaches to negotiation, that emerged from the Harvard Business School gradually over time became absorbed into the literature and into the examination syllabus of the CIPS negotiation module without challenge. It is certainly remarkable that the concept of these two competing approaches to negotiations has grown to become the dominant discourse in the literature on buyer-seller negotiations. The literature claims that the integrative approach is the more highly favoured with buying and selling negotiators.
The CIPS course book on negotiation begins the section on ‘Collaboration and distribution approaches to negotiation’ with the statement:
“There is consensus that two distinct negotiating situations occur. Firstly, there are those where agreement is sought through collaboration (integration) and problem solving and those where agreement is reached by distributive (competitive) means”
(Harwood, 2006, p.5)
Murray (1986) challenged whether there really are two competing theories that explain what happens in negotiations. He contrasted the opposing theories of White (1980) and Fisher and Ury (1981) and identified that negotiators who position themselves at either of these polarised positions are working on different assumptions about their worlds of negotiations.
The various labels to describe the two theories as categorised by Murray are: ‘competitive and coordinative’ (Pruitt, 1981), ‘competitive and co-operative’ (Williams, 1983), ‘adversarial and problem-solving’ (Menkel-Meadow, 1984), ‘hard, soft and principled’ (Fisher and Ury, 1981), ‘distributive and integrative’ (Raiffa, 1982), ‘functional and developmental models of negotiating behaviour’ (Gulliver, 1979), and ‘bargaining and problem-solving’ (Hopmann, 1995, Hopmann, 1996, Niemann, 2006). Whilst Raiffa may have brought attention to the distributive and integrative labels, they had in fact existed in Walton and McKersie (1965), in the context of labour relations negotiations between unions and management, although the foundations of the problem-solving concept within negotiation were laid by Follett (1924) and then subsequently developed by Rapoport (1960).
In the procurement field, these became widely identified with Lamming (1993) as he was closely associated with the global automotive research project (Womack et al., 1990). Lamming seems to have adopted the position that negotiation itself was an outdated practice remaining from a less enlightened era, and that he had been privileged to be granted an insight into a ‘brave new world’ of partnerships led by Toyota and the rest of Japanese manufacturing industry. It was as though negotiation had no part in the ‘grown-up’ world of the new ‘lean’ automotive manufacturing industry.
Fisher and Ury (1981) named the distributive bargaining situation as ‘win-lose’ because they believe that in this type of negotiation the goals of the negotiating parties are fundamentally in direct conflict with each other. They named the integrative approach as ‘win-win’, in which the goals of each party are not mutually exclusive, and they did not specify any types of negotiations for which this approach might be inappropriate. So began a trail of researchers who accepted that the ‘win-win’ approach is good, innovative and modern, and as this belief grew, so did its counterpart, that the ‘win-lose’ approach is adversarial, entrenched, old-fashioned and bad. Over time they have become accepted as being constructive versus destructive approaches to negotiation, and also an idea has emerged that somehow every negotiator has a choice to make at the outset of a negotiation to take one approach or the other. This is known as the negotiator’s dilemma (Lax and Sebenius, 1986 p.38).
However, this is to take a concept from one specific field of negotiation (labour relations) and treat it as generally applicable across all types of negotiation. Walton and McKersie (1965) said that if one side pursues its goals, it does not necessarily preclude the other from achieving its own objectives, because it is possible for both sides to win. Cox (2003b) takes ‘the negotiator’s dilemma’ a stage further, although not mentioning the word negotiation anywhere in relation to the concept, preferring to use the more vague terms ‘relationships’ between ‘exchange partners’, but it is clear from the context that what is meant is ‘negotiations’ between ‘buyers and sellers’. He identified four basic relationship management styles or approaches that buyers could adopt in these ‘relationships’, which he described as:
“Adversarial arms-length relationships where the exchange partner seeks to maximise value and regularly tests the market.
Non-adversarial arms-length relationships where the exchange partner pays the current market price without recourse to aggressive bargaining, but tests the market actively.
Adversarial collaborations where the exchange partner provides extensive operational linkages and relationship-specific adaptations, but seeks to maximise the appropriation of value.
Non-adversarial collaboration where the exchange partners operate in a transparent operational manner with long-term relationship commitments and share any resulting commercial value equally.”
(Cox et al., 2003b p.544)
Raiffa’s proposition that negotiations are either integrative or distributive quickly gained acceptance as universally applicable to all types of negotiations, although interestingly the concept is dismissed as largely irrelevant by Farrington (1980), who states that:
“It has been proved, beyond doubt, in many research studies that a great deal of mistrust exists between buyer and seller.”
Farrington, (1980, p.122)
Farrington’s statement about the extent of proven mistrust between buyer and seller is an important one. If such deep rooted mistrust exists, it can’t be possible that the trend in negotiations between buyers and sellers has shifted towards the dominant use of collaborative approaches.
Instead of referring to the two approaches, integrative and distributive, Sheridan (1991) describes three ‘styles’: ‘passive’; ‘co-operative and mutually supportive’; and ‘combative or adversarial’. Sheridan op. cit. ( p.7) was aware that:
“a co-operative negotiating style – sometimes called ‘the win/win’ method – has been much recommended in recent years”,
but he does not say by whom, or identify where the idea might have come from. It is clear that he does not believe that it has any real relevance to buying negotiations and continues to defend so-called ‘adversarial negotiation’. In addition to asking negotiators about their beliefs around integrative and distributive negotiations, it was decided to ask the actor sample of this research to complete the questionnaire based on Murray’s (1986) study, see chapter 3.
There is a gap in the extant knowledge around integrative and distributive negotiations. Is there really a consensus among practicing negotiators that integrative, collaborative negotiation is the prevailing approach used, or is it even used at all?
10. Emotional Intelligence
This section examines and analyses relationships between buyers and sellers, particularly within the context of the sales and marketing perspective of trying to establish and build relationships in order to increase sales.
Emotional Intelligence (EI) emerged from the USA in the early 1990s by Mayer and Salovey (1990) and then became established in the UK with research by Goleman (1995) and Professors Higgs and Dulewicz of Henley Management College (Dulewicz and Higgs, 1999, Dulewicz and Higgs, 2001, Higgs and Reynolds, 2002).
Mayer and Salovey (1990) op. cit., defined Emotional Intelligence as the “ability to monitor one’s own and others’ feelings and emotions, to discriminate among them and to use this information to guide one’s thinking and actions.”
Emotional Intelligence consists of seven key components: Self - awareness, Conscientiousness and integrity, Motivation, Emotional resilience, Intuitiveness, Influence, and Interpersonal sensitivity.
Higgs and Reynolds (Higgs and Reynolds, 2002) examined the need for Emotional Intelligence in negotiation and concluded that a high level of competence is required for negotiation in all seven of the EI components.
1. Interpersonal Chemistry
Whilst Emotional Intelligence goes some way to prescribe the seven elements
Salespeople have long wished to present themselves to business buyers as similar to them in as many ways as possible (Evans, 1963, Dwyer et al., 1998). The landmark study on buyer-seller similarity was Evans (Evans, 1963) which examined seven characteristics and established that the greater portion of successful buyer-seller dyads were where there was greater similarity between buyer and seller. The ‘interpersonal chemistry’, or ‘relationship chemistry’ that exists between two people is unique, and usually the most positive bonds are established when individuals share similarities (Campbell, 2011). Campbell describes the core components of relationship chemistry as non-judgment, similarity, mystery, attraction, mutual trust and effortless communication.
Herbst et. al. (2011) conducted a study to obtain an overview of negotiation research in marketing in which they assessed the top marketing journals over a period of 45 years, identifying 78 negotiation related papers. With respect to the parties Herbst et. al. (2011). found that existing research mainly analyses negotiator characteristics’ impact on negotiation behaviour and performance. According to Spiro and Weitz (1990) these negotiator characteristics fall into five categories: personality, intrinsic motivation, experience, managerial style and performance. A buyer in a negotiation is often automatically considered to enjoy a stronger position than the seller, which Cotter and Henley (2009) refer to as ‘subservient seller syndrome’ (SSS), particularly in highly status and class structured societies. Herbig (1995) cites Japanese society as the extreme example of a status-conscious society in which the buyer feels dominant and it is considered normal to demand a great many things of the seller as a right. This deference or subservience often extends to sellers mimicking and mirroring the behaviour of buyers in order to appear to be similar to the buyer.
The way in which salespeople emphasise similarities between themselves and buyers, and in other ways tailor their sales proposals to individual buyers is a practice known as adaptive selling behaviour (ASB). ASB became established by Weitz and his colleagues (Saxe and Weitz, 1982, Weitz et al., 1986) and is defined as altering sales related behaviours during a customer interaction or across interactions based upon perceived information about the nature of the selling situation. Spiro and Weitz (1990) identified that there are five characteristics that salespeople adapt, which are personality, intrinsic motivation, experience, managerial style and performance. Within adaptive selling behaviour Spiro and Weitz (1990) identified five personality traits which allow interpersonal flexibility: self-monitoring, being the degree to which they alter their presentation in response to situational clues; empathy, which they define as ‘the reaction of individuals to the observed experiences of other individuals’ (p.63); androgyny, being the extent to which people perceive themselves as both assertive and yielding and both instrumental and expressive and having the ability to adopt the specific interaction pattern appropriate to the situation; being an opener, meaning having the ability to get people to ‘open up’ to them; and locus of control, which, according to Paulhas (1983) comprises personal efficacy, interpersonal control and socio-political control. Spiro and Weitz (1990) argue that empathic ability is directly related to ASB, and emphasise the importance of salespeople to spontaneously adopt the perspective of their customers through intellectual apprehension of their mental state or condition, thereby generating a genuine feeling of concern toward the customer. They argue that sellers with greater empathic ability should be able to improve their adaptive selling effectiveness based mainly on the premise that sellers gain ‘unique insights’ by being able to place themselves psychologically and emotionally in the position of the customer.
Closely related to the concepts of adaptive selling behaviour and empathic ability is the concept of liking and disclosure. If individuals benefit those that they like (Worthy et al., 1969), then it follows that individuals should disclose more to those they like. Miller (Miller, 1990) established that there is a strong correlation between liking individuals and disclosure of highly intimate information, but that it is dependent upon the particular relationship between the two individuals. Information sharing in negotiation is a matter of trust (Harinck and Ellemers, 2006). Alternatively sharing information increases the likelihood and quality of an agreement (Lax and Sebenius, 1986, Thompson, 1991, Pruitt and Carnevale, 1993). Moreover, sharing information makes one vulnerable to exploitation by the other party (Kelley and Thibaut, 1969, Lewicki, 1983).
Meehan and Wright (2011) conducted a study of who, or what, holds power in business-to-business buyer-seller relationships. They found that power is sometimes derived from individual characteristics, such as knowledge, skills or their own profile, and is sometimes derived from relational interactions such as elements of the relationship between buyers and sellers. Elements that were identified as strongly important were honesty, empathy and fairness. There was a high desire among both buyers and sellers to work in trusting relationships.
2. Trust
One of the outcomes of an established buyer-seller relationship may be that a basis exists for building trust between seller and buyer. Smeltzer (1997) conducted a study to define trust from the buyer’s perspective. He identified that key characteristics were consistency, the sharing of important information, and mutual respect, all of which have relational dimensions. Because of these relational dimensions, trust may facilitate further business transactions, as the information flow between these personally connected sources is taken as more reliable and trusted by both parties (Coleman, 1988, Tenbrunsel et al., 1999).
If the economic dependency is asymmetric (i.e. unbalanced in favour of one party over the other) then trust may become an important source of leverage in maintaining the business relationship, particularly if the emphasis of the negotiation can be shifted to non-economic elements of the transaction (Meehan, 2007).
By establishing a relationship of trust, the less powerful party can reduce the risk of exploitation (Campbell, 1997), because by building the relationship of trust, opportunistic moves by the more powerful party can be reduced (Tenbrunsel et al., 1999). Conversely, if neither party trusts the other, then non-co-operation will result (Christopher, 1998). Lack of trust is a barrier to reaching agreement (Luecke, 2003), and trust begins with civility and respect (Coutu, 2002).
Sako (1998) identified three forms of trust between buying and selling organisations: firstly, contractual trust, which is based on the belief that the other party will honour its obligations in accordance with the contract; the second form is competence trust, which is based on the belief that the other party is competent and capable to deliver, and the third form is goodwill trust. This form of trust is based on the belief that both parties are so sufficiently committed to the relationship that they will be prepared to do more than contractual obligations require, and will not expect immediate recompense for doing so.
If one is negotiating with a party that one does not believe to be trustworthy, then there are several safeguards that can be included in the contract (Luecke, 2003):
• Emphasise that the deal is predicated on their accurate and truthful representation of the situation.
• Require that the other party provides back-up documentation, and that the terms of the deal be explicitly contingent on the documentation’s accuracy.
• Structure the agreement in a way that makes future benefits contingent on current compliance and performance.
• Insist on compliance transparency. Compliance transparency refers to one’s ability to monitor compliance from the outside.
(Luecke, 2003, p.83)
Weiss and Hughes (2011) state the importance of establishing trust early in the relationship:
“Build trust first. Trust is currency in any culture.”
There is a gap within the literature regarding the interpersonal chemistry between negotiators around whether trust is important to negotiators.
3. Integrity and deception
Lewicki and Letterer (1985 p.324) accord with the view that “lying and deceit are an integral part of effective negotiation”. Deception is commonly used in negotiation (Schweitzer, 1997) and can be effective in increasing success in meeting one’s objectives (O'Connor and Carnevale, 1997). During the 1990s there was an active debate on the ethics of deception in negotiation (Bazerman et al., 2000), though not specifically within the buyer-seller context. Alternatively, several writers stated that deception in negotiation is to be expected and is morally acceptable (Wokutch and Carson, 1993, Strudler, 1995). In contrast, other writers maintain that deception is morally unacceptable and should always be avoided (Dees and Cramton, 1991, Dees and Cramton, 1995). Olekalns and Smith (2009) identified that deception is most likely to occur when negotiators have a low level of trust or negative emotions in the context of nonmutual or low dependence relationships, whereas negotiators who expressed positive emotions used less deception.
Individual negotiators tend to perceive how ethical standards apply to their particular circumstances depending upon how they are likely to affect their interests and motivations at the time (Kronzon and Darley, 1999). Negotiators tend to increase their use of deception as they stand to gain greater personal benefit from a successful outcome (Tenbrunsel, 1998). Furthermore, negotiators are more likely to use deception to satisfy their personal motivations than to satisfy the motivations of the negotiating team (O'Connor and Carnevale, 1997). Negotiators are subject to the same motivations as any other individuals. When assessing the motivation of traitors for conducting espionage against their own state or company, LeRoy Stone developed a two-factor motivational theory based on ‘MICE’ – Money, Ideology, Compromise/Coercion or Ego. Stone postulates that spies motivation can be plotted against two variable axes, the first being Money to Ideology and the second being from Other (including ego) to Disaffection (Stone, 2001).
If Stone’s theory is correct, in that all acts of treachery are motivated by a combination of these motivational factors, then it is reasonable to conclude that in the event that a negotiator were personally, rather than professionally motivated, then the motivational factors would be the same. Individuals tend to believe that they are more ethical than the average person (Tenbrunsel, 1998). When they do engage in ethically questionable behaviour, they often justify it as a necessary form of self-defence (Shapiro, 1991). Furthermore, a negotiator’s expectation that their opponent will try to deceive them is influenced by their own tendency to deceive (Tenbrunsel, 1998). Finally, negotiators are more likely to tell the truth in face-to-face negotiations than when using any other media (Valley et al., 1998).
Several gaps exist in the current knowledge base arises around integrity and deceit: How important do negotiators believe integrity to be? Do they deliberately deceive their opponents in negotiations? Is there a code of integrity that negotiators abide by? Is it acceptable for negotiators to tell lies in negotiations? Or is it acceptable to deceive their opponents provided that they don’t actually tell a lie? Do negotiators expect their opponents to lie to them, or try to deceive them?
4. Respect, Face and Ego
Mutual respect is a powerful enabler in negotiation, according to Lax and Sebenius (1986, p.64). They also state that by contrast, disrespect of one party by the other is a serious disabler in negotiation, and can create an unsurpassable obstacle to reaching the best possible agreement. Deutsch, (1961) identified that maintaining face is necessary to sustain one’s self-esteem. White et al. (2004) studied ‘face threat sensitivity’ (FST) in negotiations and stated:
“When a person’s face is threatened in a negotiation, it can tip the balance of his/her behaviour away from cooperation toward competition, resulting in fewer agreements and/or less cooperative agreements.”
When a negotiator encounters face threat it has been found to increase negotiator competitiveness and decrease negotiator cooperation (Walton and McKersie, 1965).
Further variations of these aspects of human interaction include ‘relationship compatibility’ (Trimarchi et al., 2010), who state that ‘present research defines buyer-seller relationships compatibility as the capability of two firms to engage in mutually beneficial exchange, in continuity, across the dimensions of competence and distance.’ This definition extends to the individual negotiators within those firms. Another variation is known as ‘motivational orientation’ (Schei and Rognes, 2003), which is focused on the orientation of the negotiator and opponent, specifically whether this is collaborative or adversarial, and whether there is symmetry of information (e.g. do each of the negotiators know the orientation of their opponent). Schei and Rognes (2003) conclude that motivational orientation is an important influence on negotiation behaviour and outcome, as found by De Dreu et. al. (2000). One of the most recent studies examined the changing nature of relationships, which it described as relationship velocity (Palmatier et al., 2013). This is based on the belief that relationships between firms evolve over time as they grow, mature and decay as originally proposed by Dwyer et. al. (1987). Palmatier et. al.(2013) identify the dynamic components of the relationship that change over time, the key component being commitment, and state their theory of relationship dynamics by introducing the construct of relationship velocity, or the rate and direction of change in commitment between buying and selling organisation.
All of these categorisations, and many more, describe one or more aspects of the unique interaction that takes place between two people when they interact. In addition there are many more commonplace elements in the mix of human interactions including trust or mistrust, liking or disliking, respect or disrespect, charm, charisma, friendliness or antipathy, empathy, gravitas, reputation, personal attractiveness and ability to get on with people. The first person to define different personality types was the psychologist Dr. Carl Gustav Jung (1921), who identified sixteen different psychological personality types, based on four pairs of opposing characteristics: Extraversion or Introversion (E or I), Sensing or Intuition (S or N), Thinking or Feeling (T or F) and Judging or Perceiving (J or P). Thus, everyone has a personality with four dominant characteristics, and these may vary from being a marginally dominant preference to an extremely dominant preference. These types were further developed by Isabel Myers (1952) and will be familiar to those many people who have been given their Myers-Briggs personality type after completing the Myers-Briggs Type Indicator questionnaire. Futrell (2002) in (Harwood, 2006) took two of the competing pairs of Jung personality traits (Thinker v Intuitor, and Feeler v Senser) and allocated strengths and weaknesses to each. However, these offer no clue as to whether the strengths or weaknesses are likely to dominate, and, therefore, it is of no value as a predictor of negotiator success, or even negotiator performance.
Personality may be defined as:
‘The relatively enduring and stable patterns of behaving, thinking, and feeling which characterise an individual’
(Cooper and Makin, 1988. p.58)
However, personality within the sphere of negotiation can be taken to be a broader ability to influence the other party, covering a variety of personal characteristics, including the individual’s credibility, personal reputation for integrity, appearance and self-presentation, perceived expertise, persistence and tenacity and even personal attractiveness and likeability (Lewicki et al., 2006). It could be equated to personal charisma.
The seminal work on personality characteristics or styles in negotiation was conducted by Rubin and Brown (1975), who proposed the theory that there are two personality variables that determine the ability to influence a negotiation: interpersonal orientation and motivational orientation. The context of Rubin and Brown’s (1975) work was social psychology, set against a number of varied events in 1974 which included the wars in Cyprus and the Middle East, the impeachment and resignation of the US President, a large increase in the number of divorce proceedings, and countless disputes between labour and management. The work did not address business-to-business negotiations between buyers and sellers. The four personality styles identified in Rubin and Brown’s (1975) four box matrix are competitor, avoider, accommodator and collaborator (Kennedy, 1998a), and their typical characteristics are at the extreme ends of the two scales. These are: competitors, who use threats and coercive behaviour in an aggressive and domineering manner, they make demands and seldom make offers; avoiders, who prefer to avoid conflict and taking decisions, and they tend to have limited social skills and are not good at using them; accommodators, who tend to be relationship-oriented, and they can make concessions too quickly if threatened with conflict, preferring to seek friendly agreement and ingratiation; finally, collaborators, who seek to find agreement by working in problem-solving mode via good working relationships with their opponents. These four personality styles of Rubin and Brown (1975) appear to have no connection with the work and accepted personality types of Jung (1921) and Myers (1952) above, and the four personality styles of Rubin and Brown are typical behaviours rather than characteristics.
Reynolds (2003) identifies that by establishing a rapport prior to the negotiation, a potential negotiation capability is low or high at the outset. It would, therefore, appear to be a worthwhile investment of time for negotiators as a precursor to all negotiations.
There remain gaps in the literature around how important interpersonal chemistry is to negotiators. Does the relationship chemistry between negotiators influence negotiation outcomes? Or is the ‘personal chemistry’ between the negotiators an element that remains elusive, and is that something that cannot be predicted or planned for until the negotiators come face to face?
5. Female negotiators
Female negotiators tend to view negotiations in a different relationship context than male negotiators (Bixenstine et al., 1964) in (Kolb and Coolidge, 1991). Linked to personality traits, these gender differences have been found to influence negotiation outcomes. Bixenstine et al. (1964, p.157) identified a particular difference between male and female negotiators:
“One possible interpretation is that women tend to be initially more trusting and trustworthy than men but are less willing to forgive violations of trust. Another interpretation, which really differs only in emphasis, is that men are more willing to ‘take advantage’ of another’s unconditional co-operation but are more willing to forgive such violations of trust by another man.”
Frankel (2004) provides her own insight into why women need to leave behind the learned behaviours expected of girls, and assume the more masculine behaviours of grown up women, particularly assertiveness, in order to succeed in the male-dominated world of business. Kolb and Coolidge (1991) identified four basic differences in the ways that men and women approach negotiations: a) women tend to take a broader view of the relational context, relate more to the perceptions of individuals and, expressing more emotions and feelings; b) they view negotiation as part of a relationship with the other party; c) they tend to allow all parties to establish their own power base, whereas men use power to achieve their own goals; and d) they tend to use dialogue in a more problem-solving mode than men, who use dialogue to persuade the other party.
Kolb (2009) conducted a review of the considerable literature produced over the past 25 years on females as negotiators. This tends to have come to prominence due to the growth of interest in the feminist views of gender and the social construction of gender, and also in the recent interest in the ‘glass ceiling’ and the gender gap in compensation and achievement. Many of these studies have focused on the inability of women to achieve parity of compensation with their male equivalents, and these studies have revealed much about women’s general deficiencies as negotiators.
There was minimal literature specifically examining the role of gender in commercial negotiations between buyers and sellers, especially from the buyer’s perspective, until Faes et al (2010), who concluded:
• “Male negotiators tend to set themselves higher objectives than female negotiators, specifically under conditions of high competitiveness;
• Male negotiators do not set themselves low objectives more regularly;
• Women tend to set themselves a lot more mid-range objectives and are thus somewhat more realistic than men;
• Female negotiators tend to obtain higher results than male negotiators. Male negotiators are more likely to obtain mid-range results;
• Although the roles of women in industry tend to become more identical to men’s roles, the aforementioned differences in results did not change in our database over time;
• Female negotiators are more likely to reach no deal results;
• Female negotiators use communication exchanges more frequently than male negotiators. Male negotiators use tactics more frequently than female negotiators;
• Open communication is used more frequently by female negotiators;
• Female negotiators use competitive tactics less often than male negotiators.
All of the observed relationships were identified as significant but weak.”
What is not clear from this literature studying the success of women as negotiators against male counterparts, is whether their success is due to their ability to exploit ‘girlish behaviours’ of which Frankel (2004) is so critical, or whether they use the more mature behaviours of adult women. It is clear that the ‘relationship chemistry’ is extremely complex and incorporates a multitude of elements that influence whether the experience of the two individuals coming together is positive or negative. The gap in the literature is whether the relationship chemistry between negotiators is important in determining negotiation outcome.
11. Persuasion Techniques
It is commonly acknowledged within the purchasing literature, and certainly as taught in the CIPS module on negotiation, that there are five key tools in negotiation and these are: bargaining, compromise, coercion, logical persuasion and emotion (Steele et al., 1989, Harwood, 2006, p. 115). However, Farrington (1980) identified the original source of these persuasion techniques as being Brown et al. (1966, p.488) and he states that they actually identified six, not five, ‘attitudinal structuring’ techniques “that lead to an accommodation of viewpoints”, the sixth, lost technique being “a learning process to understand each (the other) side’s genuine objectives vis-a-vis some issue”:
“An exercise in logical persuasion; an application of power and coercion; an exploration of mutually advantageous concessions; a search for middle ground compromise; a learning process to understand each side’s genuine objectives; and a special case of attitude change involving emotional components.”
(Brown et al., 1966, p.488 )
To place these persuasion techniques in their original context, they are actually part of a section labelled ‘Negotiations with an Antagonist’. The five main persuasion tools or techniques in Brown et al. (1966) may have originated from earlier versions of the book by just one of the authors, Berrien, in 1944. What is unknown from previous work is whether buying and selling negotiators are aware of the five traditional persuasion techniques, and if so, which do they use out of preference, and are there any techniques that they would not use? Are there any other persuasion techniques that they use?
Influencing strategies between negotiators are classified as either coercive or non-coercive (Payan and McFarland, 2005). Coercive influence strategies are intended to motivate compliance by the use of punishments and/or rewards, whereas non-coercive influence strategies work by attempting to change the beliefs of the other party, in other words, persuasion techniques Payan and McFarland (2005).) .
Before the existing secondary data on each of these five different persuasion techniques is examined in detail, it is worth noting that they are not universally accepted as negotiation techniques. Baily et al (1994, p.165) identify four alternatives to negotiation: persuasion, give in to the other party’s demands, coercion, and problem solving. Two of these, persuasion and coercion, are among the traditional five persuasion techniques. If these are alternatives to negotiation, they can hardly be negotiation techniques. Kennedy (2003, p.6) identified six alternatives to negotiation: persuasion, giving in, coercion, problem solving, instruction, and arbitration. There are two others, emotion, one of the original ‘five persuasion techniques’, and acceptance, which may be considered to be the same as giving in, but in certain circumstances, could be different. The reasons why these are alternatives to negotiation and may not necessarily be persuasion techniques are as follows:
Logical persuasion is not a negotiating technique because no exchange is sought. The logical persuasion is not normally accompanied by the offer of an inducement to accept the logic. This is one of Kennedy’s (2003) six alternatives to negotiation. Similarly, compromise is not a negotiation technique because, again, no exchange is sought. The use of threats, power and coercion is not a negotiation technique because negotiation is a voluntary exchange process, that requires both parties to be free to accept or refuse any offer. As Kennedy (1998a, p.5) states:
“The threatened menace implied in the Godfather’s ‘offer you can’t refuse’ (Puzo, 1970, p.38) is not within the ambit of negotiation . . .”
In addition, it is important to recall what Brown et. al (op cit). stated:
“A host of studies testify to the inappropriateness of force as an effective instrument of attitude change.”
The use of emotion may be considered not to be a negotiation technique because it could be simply a plea to the other party’s softer side, (but see 2.5.4 Emotion). It is not a request that offers anything in return (except possibly gratitude), so there is no trade. An exception that comes to mind is observed within the film “The Godfather”, whereby the Godfather’s (Puzo, 1970, p.31) granting of a favour in response to an emotional appeal by the undertaker, Bonasera, with the caveat:
“Some day, and that day may never come, I will call upon you to do me a service in return. Until that day, consider this justice a gift from my wife, your daughter’s godmother.”
In fact, only bargaining is a negotiation technique because it is the central core of negotiation (Kennedy, 1998a). Although the five persuasion techniques are mentioned in the official text book of CIPS level 4 module on negotiation (Harwood, 2006), it is only by inclusion of a small table giving a very brief summary of the five techniques. The source is quoted as ‘derived from (Steele et al., 1989)’. However, the table is an inadequate misrepresentation of Steele et. al.’s (Steele et al., 1989)work, with the techniques not explained in any detail. Only two of the approaches involve giving up part of your position: bargaining and compromise. The other methods, logic, coercion, emotion – all take the form of a demand, request or plea, which may or may not work, but it could be argued that they are not strictly negotiation.
1. Bargaining
Bargaining is at the heart of negotiation. It is about exchanging – the negotiator is prepared to give something up in exchange for something gained. Steele and Beasor (1999) say that it is the exchange of various items (‘variables’) that each party values. Rubin and Brown (1975, p.2), define bargaining as:
“The process whereby two or more parties attempt to settle what each shall give and take, or perform and receive, in a transaction between them.”
They treat the terms bargaining and negotiation as synonymous. One of Kennedy’s (1980) key contributions to the knowledge of negotiation is his identification of the single most important rule of bargaining, and of negotiation as a whole, that all proposals and concessions, indeed practically any statement at all, must be conditional:
“Everything, absolutely everything, is conceded in exchange for something else.”
(Kennedy et al., 1980, p.90)
Bargaining is different to haggling, which Kennedy defines as:
“Haggling is about finding out the maximum that the other person would pay, without disclosing the minimum that you would accept”.
(Kennedy, 1998b, p.64)
‘If’ is described by Kennedy as the most important two letter word in negotiation, and indeed, this is the most fundamental lesson of negotiation. It, therefore, follows that anyone granting concessions without the IF word is not negotiating. The official CIPS course book, (Harwood, 2006) does not contain this most basic of lessons on the subject. Despite the fact that one of the most widely used textbooks for purchasing courses, Baily et al. (1994) refers to Kennedy et. al (1980) for their definition of negotiation, they omit the fundamental ‘if … then’ lesson. One of the most comprehensive books on Purchasing and Supply Management to date, by Lysons and Farrington (2006) has an extensive chapter on negotiation. It is surprising, therefore, to discover that the basic lesson of bargaining is not present within it. That the above mentioned books, core to the negotiation module of the CIPS syllabus, discuss a process of concession making, but fail to underline the imperative that all offers must be conditional creates a serious shortcoming in the purchasing literature on negotiation. The established five ‘persuasion techniques’ reviewed here (excluding the sixth technique of ‘understanding the other party’s genuine objectives’) are not techniques or tools of equal importance. As Rubin and Brown (1975) state, not only are the terms bargaining and negotiation synonymous, negotiation IS bargaining. Whatever other persuasion techniques are used, and in whatever way they are utilised, they do not constitute negotiation if they are not part of an ‘if ... then’ scenario.
Steele, et.al. (1989, pp.14-15) outline four ‘rules’ of bargaining:
“Rule one: Do not indicate that you are prepared to move quickly from your position.
Rule two: Move slowly, making the other party work for every concession they get.
Rule three: Avoid putting ‘markers’ down. (By putting a marker down you immediately put a ceiling on what you can achieve).
Rule four: Get a return for any concession you make.”
It is a failure of their book that Steele et al. (1989), in their fourth rule above, almost make the same point that every proposal must be conditional, except that they fail to say it explicitly. Steele (1990) however, in his ‘PMMS Cue Cards’ revised these to three rules:
1. “Don’t expose your position
2. Thank and bank; it now belongs to you
3. Move conditionally, slowly and in small steps.”
1. Extreme initial offers
Many writers on negotiation recommend that the initial offers by both buyer and seller should be somewhere towards the extreme end of the credible spectrum, the most well-known being Karrass (1970). It is even considered best practice in tactical negotiation according to Hughes and Mikkelsen (2007). Some writers believe that the first negotiator to put forward a figure automatically places him/herself in a position of weakness (McCormack, 1995). The initial price requested by the seller and the first offer of the buyer determine the bargaining range within which the negotiation will take place, assuming that both parties are prepared to continue. More extreme opening offers can move outcomes favourably in the direction of the party that makes the extreme opening offer. However, the tactic of making extreme opening offers introduces a big risk, because they increase the likelihood of impasse (Blount, 2000). An example of a highly successful extreme opening offer is that of Richard Branson (2006) when he offered just 5% of the asking price for Necker Island in 1977. Whilst the offer was turned down twice, the owner eventually accepted it three months later. Nash (1950) includes a classic bargaining model which predicts that, in two-party negotiations over price, bargainers will settle at the mid point of the Zone of Possible Agreement (ZOPA). The concept of ‘firm negotiators’ (defined as having high goals) obtaining better results than negotiators with less ambitious goals was identified by Karrass (1970). Whether professional buyers are aware of the theories of bargaining is not known, and, therefore further gaps arise in the literature here: are buying and selling negotiators familiar with the ZOPA? Do they believe that the most beneficial outcome is likely to follow an extreme initial offer or a more moderate one?
2. Logical persuasion
Logical reasoning is probably the most commonly used approach to business negotiations. It requires the preparation of statistics and evidence in order to prove to the other party that they must make a concession (Steele and Beasor, 1999). The ability to use logical reasoning successfully depends upon being able to articulate a rational argument and it being accepted by a rational negotiator. However, Herbig (1991) identified that business negotiators rarely act completely rationally due to their personal emotive preferences, which are likely to influence their behaviour. For example, this could mean that they have a desire to act with fairness, or to deliberately mislead the other negotiator, or they may be motivated by a different time perspective than the other negotiator (for example, a quarterly sales target).
The need to articulate a rational argument depends upon language skills. These are fundamental to negotiation, and comprise three elements: language, culture and discourse (Mulholland, 1991). Mastery of these skills will lead inevitably to mastery of negotiation. A major element of the language used in negotiation is in the form of questioning, and this is a separate subject in its own right, which requires the same degree of expertise as the language skills (Nierenberg, 1987). Steele et. al. (Steele et al., 1989, p.21) outline three ‘rules’ of logical reasoning:
“Rule one: Be careful how you use the ‘why?’ approach.
Rule two: Get your logic in first.
Rule three: Maintain the credibility of your logic.”
Steele (1990) revised these to:
• “Get your logic in first.
• Don’t ask why – they may actually tell you!
• Don’t depend solely on logic – vary your style”
3. Power and coercion
This section aims to analyse and contextualise the existing research, information and secondary data on negotiations between buyers and sellers through a critical evaluation of the literature on the use of power and coercion, including revenge and retaliation, in negotiations. There are three dominant schools of thought concerning power in buyer-seller relationships (Meehan, 2007). The first school attributes power to individuals, and is the longest established (Webster and Wind, 1972, Bonoma and Johnston, 1978, Fern and Brown, 1984, Zemanek and Pride, 1996, Giannakis and Croom, 2000, Wilson, 2000). This focuses on personalities, yet lacks contextual boundaries (Meehan, 2007). The second school attributes power to individuals within relationships (Busch and Wilson, 1976, Ho, 1991, Nielson, 1998, Cheng et al., 2001). The final school attributes power to the organisation (Cox, 1999, Ratnasingam, 2000, Cox, 2001c, Esposito and Raffa, 2001, Cox et al., 2004, Sanderson, 2004), but note that Cox et al and Sanderson were all working together in the same faculty at the University of Birmingham Business School, – so these different references represent only one viewpoint. It is also important to note that Cox et al never personalise this work by placing it in context with the behaviour of buyers and sellers, nor even mention the subject of negotiation. They refer to ‘exchange’ between organisations, as though there is no human interface, and assume that the balance of power between organisations somehow prevails without any other influences. These ontological positions are driven by the intellectual traditions of the domains from which these schools have developed (Meehan, 2007).
Steele et al. (Steele et al., 1989, p.18) give two ‘rules’ of using coercion:
“Rule one: Before you threaten, think about the consequences.
Rule two: Use ‘mirrored’ or emotional threats rather than crude ones.”
Steele, in his ‘PMMS Cue Cards’ (Steele, 1990) revised this to three rules of using threat:
1. “Threaten discreetly
2. Add threat to bargaining by using ‘if’
3. Never make a threat you cannot carry out”
Whenever power is discussed in relation to negotiations between buyers and sellers the subject of Porter (1980) and his ‘five forces of competition’ model (see Figure 2.1) will soon arise. This model is meant to be useful when planning and preparing for a negotiation by determining market dynamics, according to Reynolds and Thompson (2008, p.39), as it focuses on the bargaining power of buyers (customers) and sellers (suppliers).
Figure 2.1: Porter’s Five Forces of Competition
[pic]
Source: Adapted from Porter (1980) in (Reynolds and Thompson, 2008, p.37)
The seminal work on defining types of power in social contexts is that of French and Raven (1959) in which they identified ‘five bases of social power’, these being:
Expert power: derived from having unique, in-depth information about a subject.
Reward power: derived by being able to reward others for doing [what one wants to have done].
Coercive power: derived by being able to punish others for not doing [what one wants to have done].
Legitimate power: derived from holding an office or formal title in some organization and using the powers associated with that office.
Referent power: derived from the respect or admiration one commands because of attributes like personality, integrity, interpersonal style, and the like.
(Raven, 1993) in Lewicki et. al. (Lewicki et al., 2006, p.188)
French and Raven (1959) also concluded that the more legitimate that coercion is perceived to be, the less it will engage resistance. Meehan’s (2011) study identifies three sources of power: organisational, individual and relational. Furthermore, Meehan (2011) states that who, or what, holds power is a complex synthesis of these three major sources of power. These three major themes broadly equate to three of French and Raven’s (French and Raven, 1959) five sources of power as follows:
Organisational power originated as Legitimate power in French and Raven (1959), and this was later revised to Position-based power by Raven (1993). Individual power originated as Referent power in French and Raven (1959), and this was later revised to Personality and individual power by Raven (1993). Relational power had no equivalent in French and Raven’s (1959) original five major sources of power, but emerged in Raven’s (1993) refined work as Relationship-based power.
These three elements are further broken down by Meehan into sub-elements as shown in Table 2.1.
Table 2.1: Sources of power
|THEMES |SUB-THEMES |
|Organisational |Market Environment |
| |Commercial Attractiveness |
|Individual |Knowledge |
| |Skills |
| |Profile |
|Relational |Relationship Focus |
| |Outcomes Focus |
Source: Meehan (Meehan and Wright, 2011)
These sub-elements are stated by Meehan (2011) to exist on both sides of the negotiation, both as elements of the self-perceived power of one party and mirrored or counter-balanced as elements of the countervailing power of the other party. Emerson (1962, p.32) defines power as ‘the potential to influence’. Karrass (1970, p.56) defines power as “the ability of a negotiator to influence the behaviour of an opponent”. However, his other observation is that “power, like beauty, is to a large degree a state of mind” (Karrass, 1970, p.56). He believes that power is perceived as existing by both the party that has it and the party that doesn’t, and frequently it is never referred to. Conversely, a party may be in a preferred position over another, but if neither party perceives the advantage then the power does not exist. This research aims to verify whether negotiators believe that power is real or imagined, whether either or both parties need to test the reality of the imagined power, and whether the testing of it may be a high risk, because it may erode or eradicate the position of perceived power by allowing it to be called into question.
Lewicki et al. (2006) cite two definitions of power related to negotiations:
“The ability to bring about outcomes they desire” or “the ability to get things done the way they want them to be done.”
(Salancik and Pfeffer, 1977) in (Lewicki et al., 2006, p.184)
“Presumably, a party with power can induce another to do what the latter would otherwise not do.”
(Dahl, 1957, Kotter, 1979) in Lewicki et. al. (Lewicki et al., 2006 p.184)
Atkinson (1990) introduces French and Raven’s (1959) power bases linked to his ‘motive bases’ and then builds on work by Chamberlain (1951) and Levinson (1966) in order to arrive at a ratio that a negotiator can use to determine the relative disadvantages of accepting or rejecting their opponent’s proposal according to which option will leave them worst off:
The costs or disadvantages to B of disagreement with A’s terms
The negotiating power of A =
_______________________________
The costs or disadvantages to B of agreement with A’s terms
(Atkinson, 1990, p.139)
Care should be taken when using escalation, due to the likelihood of unintended consequences (Smyth, 2012). Smyth (2012). cites Glasl’s (1982) study in which there are nine stages of escalation from ‘hardening’ through to ‘total war with all means’. The danger is that each stage of escalation tends to initiate a set of feedback loops that are self-amplifying, and further escalation often becomes self-fulfilling and almost inevitable. Again, these studies do not originate from buyer-seller negotiations but from conflict escalation situations, but some of their conclusions may apply to escalation in other negotiations. The assessment of the power balance between negotiating parties is subjective. Kennedy states:
“Your perceptions of which of you has power, whether right or wrong, in my view, play a greater role in your negotiating behaviour than any objective measure of power.”
(Kennedy, 1998a, p.82)
Two researchers who have written extensively about the exercise of power within buyer-seller relationships are Cox (Cox, 1997, Cox, 2001b, Cox, 2001d, Cox, 2001a, Cox, 2001c, Cox et al., 2001, Cox and Ireland, 2002, Cox et al., 2002, Cox, 2005b, Cox et al., 2005), and Ramsay (Ramsay, 1985, Ramsay, 1987, Ramsay, 1994, Ramsay, 1996, Ramsay, 2000, Ramsay and Jackson, 2003). However, their approaches to the phenomenon of power, its definition, and how it is acquired and exercised, are fundamentally different. Cox approaches the subject from an economist’s perspective, because political economics is his background. His perspective seems to be that any and every negotiation can be interpreted using the law of supply and demand, and despite having written a huge volume of output on the subject of power, he has avoided almost any reference to the process of negotiation, or how power might be utilised within negotiations.
Indeed, within Cox’s extensive literature there is no reference to negotiation at all, other than a passing comment on contracts being negotiated, and he often refers to buyers and sellers ‘interacting’, or buyer-seller ‘exchange’ rather than negotiation. This presents a detached, text book, and theoretical perspective, almost as though there is something low, non-strategic and unworthy about negotiation, or that Cox does not acknowledge that negotiation happens. Perhaps he believes that, because the individual circumstances of the supply and demand equation will pre-determine the outcome, there is little that a negotiator can do to alter the result. Cox has developed a large number of matrices, based on Kraljic’s original (1983) four box model, each one gaining more in complexity with the growing number of variables involved. Yet none of these models give any guidance as to how to negotiate, either for the buyer or the seller. One of the models does go as far as identifying situations of buyer dominance and supplier dominance in what Cox calls The Power Dominance Model (Cox et al., 2004 Figure 2.12).
Cox et al.’s (2002) power-dominance model charts the four potential power structures between any two parties in a commercial relationship, according to Reynolds and Thompson (2008, p.121), who say that Cox et al claim that the power of one party over another is based on the relative scarcity and utility of each party’s resources. The model considers the relative strength of each party’s power over the other and indicates which of the four different power structures apply in any given circumstance. The model is shown in Figure 2.2, and its application is meant to be useful in understanding supply markets prior to sourcing from them.
Figure 2.2: Power Dominance Model
[pic]
Source: Adapted from Cox et al. (2002) in (Reynolds and Thompson, 2008, p.121)
Cox was researching the nature of power in buyer-supplier relationships almost continuously from taking the second UK chair in purchasing and supply at the Birmingham Business School in 1993, with a particular interest in the role of power in relationships, and the enigma of ‘win-win’ (integrative) relationships versus ‘win-lose’ (distributive) ones. Up to around 2004 he appears to have shifted from the position advocated by Lamming (1996), that sophisticated buyers should be moving towards integrative rather than distributive bargaining positions, to an interim position accepting the level of ‘appropriateness’ of integrative positioning (Cox, 1997, Cox et al., 2003a), though, as mentioned above, nowhere is this process referred to as negotiation. However, more recently Cox (Cox, 2005a,) seems to have recognised that the integrative position is unrealistic:
“True win-win, in which both parties simultaneously achieve their ideal outcomes, is not feasible under any circumstances. By its very nature, buyer and supplier exchange is always contested.”
“. . . there is an unavoidable tension and conflict of interest in business relationships between buyers and suppliers.”
“It is worth remembering that, for suppliers, achieving long-term collaborative relationships is one of the surest ways by which they can close markets to their competitors. In these misguided circumstances, buyers normally lock themselves into long-term operational ways of working and then lose control over the supplier commercially because of a naïve view that win-win outcomes are achievable.”
(Cox, 2005a, p.40)
The ultimate exertion of power in a negotiation might be expected to manifest itself in the form of an overt threat or even an ultimatum. Kramer et al. (1995) define an ultimatum as “to induce compliance or force concessions from a presumably recalcitrant opponent”. Ultimatums typically have three components: a demand, a deadline by which compliance is required, and threat of punishment if compliance is not forthcoming (George, 1993). For an ultimatum to succeed, both parties must believe that the threatening party has the power to carry out the threat and intends to use it, and the threatened party must believe that it has no better alternative than to comply. These writings on ultimatums did not come from research into commercial negotiations. George’s (1993) research is in the area of last-ditch attempts to avert war, by the use of coercive ultimatums. This does not mean that their conclusions regarding the use of ultimatums are invalid, but they may well have differing outcomes when utilised in buyer-seller negotiations.
Lysons et al. (2006) identify that from one perspective the buyer will be in a strong position where:
1. Demand is not urgent and can be postponed.
2. Suppliers are anxious to obtain the business.
3. There are many potential suppliers.
4. The buyer is in a monopolistic or semi-monopolistic position.
5. Demand can be met by alternatives or substitutes.
6. ‘Make’ as well as ‘buy’ alternatives are available.
7. The buyer has a reputation for fair dealing and prompt payment.
8. The buyer is well briefed regarding the supplier’s order book, financial situation, manufacturing processes and other relevant intelligence.
and alternatively, the seller will be in a strong position where:
1. Demand is urgent.
2. Suppliers are indifferent about accepting the business.
3. The supplier is in a monopolistic or semi-monopolistic position.
4. Buyers wish to deal with the suppliers due to their reputation for quality, reliability and so on.
5. The supplier owns the necessary jigs, tools or specialised machinery.
6. The supplier is well briefed regarding the buyer’s negotiating position.
One of the most common ultimatums faced by the corporate buyer is a deadline to conclude a deal by a critical date, usually the supplier’s fiscal quarter, half or year end, and almost always with an ‘exploding offer’ (Robinson, 1995) that will expire if the deadline passes.
1. Power Ploys
There are many well-known ploys to exercise power over the opposition (Kennedy, 1998a, p.110), and Karrass (1974) gives around two hundred examples. Other lists of ploys are offered by Schoenfield (1991), Fuller (Fuller, 1991) and Gottchalk (1993). According to Kennedy (1998a):
“All ploys belong to one of three main categories: dominance, shaping and closing.”
(Kennedy, 1998a, p.107)
These three categories roughly equate to the three phases of negotiation: opening, middle and closing (Kennedy, 1998a, p.107). Dominance ploys include the closely aligned ‘preconditions’ and the ‘non-negotiable’, or ‘fait accompli’ ploy, as well as many other attempts at conditioning the other party to make concessions (Kennedy, 1998a). Several gaps arise in the knowledge base on power in buyer-seller negotiations: For example: Is power used in buyer-seller negotiation, rarely, commonly, or often? Is Porter’s ‘five forces of competition’ model used by negotiators in their planning and preparation for negotiations? What gives the buyer power in a negotiation? What gives the seller power in a negotiation? To what extent is the dependency of an organisation on the other party an attribute of power?
2. Best Alternative To Negotiated Agreement; Alternative To Negotiated Agreement; and Realistic Alternative To Negotiated Agreement (BATNA, ATNA and RATNA)
The concept of the BATNA originates from Fisher and Ury (1981), and began as part of the process of preparation for negotiation. By working through the various alternative options open to them, the negotiators on both sides arrive at their best alternative to the agreement that is likely to result from the negotiation. From one perspective, this process can be useful for producing arguments for use in the negotiation, which the other party may or may not accept as valid, and, if well positioned and presented, may act as levers leading towards a better negotiated agreement. From an alternative perspective, the alternatives may appear as unrealistic ‘grasping at straws’ and they can sometimes have the reverse effect, convincing the other party that you don’t have any real alternative to the likely outcome of a negotiated agreement with them. The reason that the BATNA appears as part of power and coercion is that an effective BATNA is power in the hands of a negotiator. With a robust alternative, the negotiator may break off negotiations at any point, whereas without one the negotiator is powerless. The concept of the BATNA representing the ‘best’ alternative is subjective as determined by both negotiating parties, but that is how Fisher and Ury (1981) framed the construct. ATNA is any alternative to a negotiated agreement, not just the best one. This was coined by the Conflict Resolution Consortium of the University of Colorado. It is considered a more realistic alternative to BATNA, but perhaps should be termed the RATNA, or realistic alternative to a negotiated agreement. Bazerman and Neale identified in their work on ‘Negotiating Rationally’ (1992) that negotiators tend to have decision-making biases that blind them to opportunities and prevent them from getting the best out of negotiations. They identify seven biases as follows:
“1) Negotiators tend to be overly affected by the frame, or form of presentation, of information in a negotiation;
2) Negotiators tend to non-rationally escalate commitment to a previously selected course of action when it is no longer the most reasonable alternative;
3) Negotiators tend to assume that their gain must come at the expense of the other party and thereby miss opportunities for mutually beneficial trade-offs between the parties;
4) Negotiator judgments tend to be anchored upon irrelevant information such as, an initial offer;
5) Negotiators tend to rely on readily-available information;
6) Negotiators tend to fail to consider information that is available by focusing on the opponent's perspective; and
7) Negotiators tend to be overconfident concerning the likelihood of attaining outcomes that favour the individual(s) involved.”
(Neale and Bazerman, 1992 p.43)
Gaps are evident in the literature: are negotiators familiar with the BATNA? How often does a negotiator have a real BATNA? Is the BATNA relevant in negotiations between buyers and sellers?
4. Emotion
The use of emotion can be interpreted in three quite different ways in the context of negotiations: firstly it could be a display of emotion in the form of an outburst, possibly accompanied by banging the table with a fist, and anger (real or feigned); secondly it could be an emotional appeal to the other party, or finally it may be an attempt to build rapport and trust (Fisher and Shapiro, 2005).
Emotions are an important factor in negotiation because they are ‘powerful, always present, and hard to handle’ (Fisher and Shapiro, 2005). In addition, emotions are important in negotiations for two other reasons, firstly because by the use of positive emotions a negotiator can positively influence the outcome of the negotiation, and secondly because negotiators ignore emotions at their peril (Fisher and Shapiro, 2005). Huthwaite (2004) identified that effective negotiators reveal their emotions nearly twice as much as average negotiators. This has the benefit of building trust with the opponent and establishing a basis for agreement, as the expression of feelings is usually constructive in moving towards agreement. However, it is this building of trust between negotiators that is itself a conundrum.
Clearly, Steele et. al. (Steele et al., 1989, p.20) were considering the first of the two approaches when they warned that there is only one rule about emotion:
“Rule: Control your emotions; don’t let them control you.”
Steele (1990) revised this to three rules in his ‘PMMS Cue Cards’:
1. “Use emotion early
2. Emotion is more persuasive than logic
3. Emotion can increase perception of value”
5. Understanding the other party’s genuine objectives
Fisher and Ury (1981) identified the importance of understanding the other party’s genuine objectives when they put forward the concept that negotiating parties should focus on interests and not positions. This learning comes from the context of territorial disputes where parties become entrenched in fixed positions. It is possible to see that if there are entrenched positions that can be exchanged for further movement on the underlying major interests this could lead to greater progress towards agreement. There is no reason why this should not apply equally in negotiations between buyers and sellers as to territorial disputes. However, this is clearly a more integrative process than a distributive one, and it may take courage and expose the negotiator to greater risk to propose such an approach within a distributive negotiation. This is an extension of defining the interests of the other party (see section 2.4.4) but ensuring that one has a real understanding of the other party’s genuine objectives, underpinned by an understanding of their true interests, as Weiss and Hughes (2011) state, “that is pure gold for the negotiator”. Although it may not be convenient or time pressures may prevent it, a separate session to meet a negotiation opponent in a major negotiation will ideally be allocated solely for meeting and building rapport in an informal environment, for example over a meal or a coffee. This may be viewed as ‘sizing up the opposition’, but is an important element in building the basis of trust from which to commence negotiating (Fisher and Shapiro, 2005).
12. Other factors influencing negotiations
This section aims to contextualise the literature covering the current situation on negotiations between buyers and sellers. Several influences on organisations are reviewed, both externally and internally driven.
1. Reciprocity
There are two distinctly different types of reciprocity of concern to buying and selling negotiators: reciprocal behaviour and reciprocal trade.
1. Reciprocal behaviour
The first type of reciprocity, reciprocal behaviour, concerns the actions of negotiators, and this reciprocal behaviour takes the form of either co-operation or retaliation in response to favourable or hostile actions of the other party. This behaviour was primarily investigated by Axelrod (1980a, , 1980b, , 1984), and concerns mathematical probabilities of success based on computer modelling of various choice behaviour strategies within ‘the prisoner’s dilemma game’ (PDG), and in particular, Tit-for-Tat (TFT) as a strategy. Axelrod’s research identified that the most effective strategy for gaining co-operation is not based upon trust but on reciprocity. There are three types of reciprocity within behaviour in negotiation according to Stoll and McAndrew (1986) these being:
a) Directional, under which a concession or retraction is met with a concession or retraction;
b) Trend, under which a concession is increased or decreased in response to the other party’s increased or decreased concession;
c) Comparative, under which a concession is increased or decreased in response to the difference between the concessions made by one’s own party and the other party during the previous round of negotiations.
However, it is worth noting that Stoll and McAndrew’s work was in the field of strategic arms limitation negotiations and not business negotiations between buyers and sellers. One particular trend type of reciprocal negotiation technique is that invented by Osgood (1962) known as Gradual Reduction in Tension (GRIT). This is a gradual de-escalation process which is started by one party making a unilateral but minor concession in the hope that the other party will be encouraged to do the same. Furthermore, this originates from conflict resolution negotiations and not the buyer-seller context. This identifies a gap regarding the knowledge around buyer-seller negotiations: do negotiators believe that reciprocal behaviour is a usable technique in negotiations? In other words, does it work?
2. Reciprocal trade
The other type of reciprocity, reciprocal trade, which is part of a broader range of commercial mechanisms called Countertrade, is defined by CIPS as:
“Reciprocal trading, which makes being a customer of an organisation, a condition of being a supplier, is generally unacceptable business practice. It is acceptable only when:
• There is no coercion
• Both parties are in agreement
• There is mutual benefit and transparency.”
CIPS (2009) Knowledge Summary: Countertrade
However, this definition is unbalanced, and largely irrelevant, as it is focused on an organisation wanting to sell to another, but being forced to overcome a barrier; that in order to become a supplier one’s organisation must as a pre-qualification already be a customer. This is not how reciprocity works in reality. A more effective, and simpler definition is:
“Reciprocal trading relationships – where firms buy some of their needs from their best customers rather than from outsiders – are probably as old as commerce.”
(Weigand, 1973, p.40)
However, the CIPS definition contains two relevant points, these being the implication of coercion, and a general lack of transparency around many reciprocal arrangements. The literature contains many examples of the concerns that buyers have had over reciprocal trading, starting with a series of articles in Harvard Business Review early in the last century (Harvard-Business-Review, 1924, Devlin, 1933, Lewis, 1938). As these and may subsequent articles make clear, the main driver in reciprocal trading relationships is the sales organisation using its major suppliers as a potential list of customers, and approaching them solely because they are suppliers, to buy their products or services. This is where the implication of coercion arises: the major customer is in selling mode, and the natural inclination of most sales organisations (and senior management) is to protect its customer relationship if that is under threat or perceived threat.
Given that reciprocity barely figures in business literature, one might conclude that it is an uncommon practice. In truth, it is a quite common practice (Ammer, 1962, p.116). Reciprocal trading in an organised form became a ubiquitous function within most large American corporate organisations in the 20th century, known as the Trade Relations Department (Weigand, 1973). These were, in effect, very efficient sales departments. Their activities focused on their large suppliers and they applied whatever coercion was deemed appropriate to persuade their suppliers to become customers. One of the simplest and most effective actions that the Trade Relations Department could take was to insist that all visiting representatives from their suppliers use only their products. Thus it became the norm that if visiting a car manufacturer, one would not be allowed access in a competitor’s vehicle (Weigand, 1973). It is apparent that buyers and purchasing departments tend to hold unfavourable views of reciprocity, primarily because it would seem to go against the ethos of trying to select suppliers based on objective criteria. By contrast, sales people tend to see it as a quick route to easy sales (Tangpong et al., 2010).
13. Summary
The dominant theories and concepts that have emerged from the literature review are that there are two approaches to negotiation, integrative and distributive; that distributive negotiation is an old-fashioned, traditional, arms-length and adversarial approach that has no place in modern procurement. It has been largely discontinued in favour of a more integrative, collaborative approach. Also, a dominant theory that there are five persuasion techniques available to negotiators: logical persuasion, bargaining, use of power and coercion, compromise and emotion. Influencing strategies are classified as either coercive or non-coercive. This review of the extant literature covering the scope of the research questions around negotiation in the B2B context has identified the following gaps in the knowledge: Gap 1: Integrative versus Distributive approaches - The first major gap in the literature concerns the approaches integrative and distributive negotiations, concerning whether there is really a consensus among practicing negotiators that integrative, collaborative negotiation is the prevailing approach used, and if so, is it used predominantly, occasionally or rarely. Gaps 2 and 3: Interpersonal ‘Chemistry’ between negotiators and trust, integrity and deceit. The second major gap in the literature concerns the question of how important interpersonal ‘chemistry’ is to negotiators. There has been considerable research in negotiation in the fields of marketing and psychology, with many new constructs emerging, such as personality, intrinsic motivation, experience, managerial style and performance, ‘subservient seller syndrome’ (SSS), deference or subservience, buyer-seller similarity, ‘adaptive selling behaviour’ (ASB), interpersonal flexibility: self-monitoring, empathy, androgyny, being an opener, and locus of control, which, comprises personal efficacy, interpersonal control and socio-political control. Closely related to the concepts of adaptive selling behaviour and empathic ability is the concept of liking and disclosure. Although some of these constructs, such as emotional intelligence have attempted to offer a comprehensive solution to the many variable elements that make up the ‘relationship chemistry’, there is little empirical evidence from negotiators to support what negotiators believe about its importance, both in establishing a positive negotiating environment and determining negotiation outcome. The third gap arising from the literature within the interpersonal chemistry between negotiators concerns the importance of trust to negotiators, and its several component elements of integrity and deceit: This gap leads to a number of ancillary questions: How important do negotiators believe integrity to be? Do negotiators deliberately deceive their opponents in negotiations? Is there a code of integrity that negotiators abide by? Is it acceptable for negotiators to tell lies in negotiations? Is it acceptable to deceive their opponents provided that they don’t actually tell a lie? Do negotiators expect their opponents to lie to them, or try to deceive them? Gap 4: Persuasion Techniques - The fourth gap that exists in the literature concerns persuasion techniques. Are buying and selling negotiators aware of the five traditional persuasion techniques, and if so, which do they use out of preference, and are there any techniques that they would not use? Are there any other persuasion techniques that they use? Gaps 5 and 6: Power and Alternatives To Negotiated Agreement concern the knowledge base on power in buyer-seller negotiations and their ancillary questions: How often is power used in buyer-seller negotiations? Is Porter’s ‘five forces of competition’ model used by negotiators in their planning and preparation for negotiations? What gives the buyer power in a negotiation? What gives the seller power in a negotiation? Related gaps to power are identified in the literature: are negotiators familiar with the BATNA? How often does a negotiator have a real ATNA? How relevant is the BATNA in negotiations between buyers and sellers?
This thesis plugs the gaps in the extant literature by investigating the perceptions and beliefs of practising negotiators at senior management level in large organisations on these topics.
In summary, the existing literature on negotiations between buyers and sellers, are devoid of practitioner input. Given the paucity of practitioner based research on which to base teaching materials the next chapter outlines the methodological choices made to provide an adequate research basis from practising senior negotiators to contribute to the academic literature in the area.
The next chapter discusses the methodology to be used in the research for this thesis.
CHAPTER 3: RESEARCH METHODOLOGY AND METHODS
3. Introduction and chapter overview
This chapter establishes the rationale for the methodological approach adopted for this research. It begins by examining the researcher’s own philosophy of research. Then the gaps in the literature are examined, and what the researcher is hoping to find to fill those gaps. Finally, the chapter describes the selected research design and details the research methods employed in gathering the data to answer the research questions in this study.
The terms “methodology” and “methods” are not synonymous – methodology is the study of methods and their underpinning philosophical assumptions, whereas methods are the research practices used within a research study (Denzin and Lincoln, 2005).
The chosen methodology and methods should be able to meet the stated aims and objectives, and they should sit comfortably with the contribution the work seeks to offer. Cognisance must be taken by the researcher of his/her own bias from the outset (Merriam, 1988) in (Cresswell, 1998, p.202). The intention of stating the researcher’s bias and confronting it is to begin a process that should go some way to countering it, therefore adding a degree of validity to the work.
14. Philosophical assumptions, research strategies and methods
1. Philosophies of research
Philosophical assumptions form the basis for any research enquiry. They inform the nature of the research and determine how a research model is utilised to answer the research questions. It is important, therefore, to identify the philosophical assumptions underlying the design of the research.
Two of the most fundamental decisions confronting researchers are to establish their own paradigm of research and whether to adopt a quantitative or a qualitative approach to their research. Guba and Lincoln (1994, p.105) state that “both qualitative and quantitative methods may be used appropriately with any research paradigm”. However, quantitative research tends to be associated with a positivistic paradigm, closely aligned to scientific research, and objectivist and experimental methods, whereas qualitative research tends to be associated with a post-positivistic approach, aligned to phenomenology, and an interpretevistic or subjectivist approach (Wilson, 2009).
Qualitative research differs from quantitative research in five significant ways (Becker, 1986). These are firstly the use of positivist and post-positivist traditions in the physical and social sciences (Denzin and Lincoln, 2005, p.11). Secondly, the use of qualitative, post-positivist methods and assumptions has been rejected by a new generation of qualitative researchers (Denzin and Lincoln, 2005, p.11). Thirdly, although both qualitative and quantitative researchers are concerned with the individual’s point of view, qualitative researchers think they can become closer to their subjects through detailed interviewing and observation, in a way they argue that quantitative researchers seldom can (Denzin and Lincoln, 2005, p.12). Fourthly, qualitative researchers are more likely to confront and come up against the constraints of the everyday social world, whereas quantitative researchers abstract from this world and seldom study it directly (Denzin and Lincoln, 2005, p.12). Finally, qualitative researchers believe that rich descriptions of the social world are valuable, whereas quantitative researchers are deliberately unconcerned with them because such detail interrupts the process of developing generalisations (Denzin and Lincoln, 2005, p.12).
All research of any kind depends upon observation (Wilson, 2009). In some fields of study the means of observation is pre-determined, for example, in botany the researcher relies on direct observation of plants, whereas in physics the researcher uses observation by instruments. Within sociology and the social sciences the observation may either be direct or indirect. In direct observation the researcher is the observer, whereas in indirect observation the researcher relies on the reported observations of others, namely the research subjects (Wilson, 2009). Within indirect observation there are two further alternatives. These are: an imposed structure, where the nature of the research problem is well understood, and an emergent structure, where the nature of the research problem is not well understood and consequently exploratory research is necessary in order to gain sufficient understanding of the research problem(s). In the case of an imposed structure the research is mainly quantitative, while most research within an emerging structure mainly consists of analysing text, which tends to be qualitative (Wilson, 2009).
The researcher may already have an idea of whether they are likely to lean towards a quantitative or a qualitative approach and also whether they favour the positivistic or post-positivistic research paradigm or philosophy of research. A paradigm is a “basic set of beliefs that guides action” (Guba, 1990, p.17). Therefore, a researcher’s paradigm is his or her ‘world view’, which defines the researcher’s view of the world, and encompasses five fundamental assumptions about that view: their epistemology, ontology, ethics (axiology), rhetoric and methodology.
In order to assist the qualitative researcher to determine his or her own paradigm, Cresswell (1998, p.75) identifies the questions that the researcher needs to resolve, along with the assumed characteristics that guide the qualitative researcher .
At the broadest level, the choice for the researcher using qualitative research in the social sciences falls between four methodological approaches: Positivism, Post-positivism, Critical Theory and Constructivism (Guba and Lincoln, 1994). However, these paradigms, or methodological approaches tend to become blurred and confused due to the frequent use of alternative terms. There are two fundamental differences between positivism and post-positivism: “positivism asserts that objective accounts of the real world can be given” whilst “post-positivism holds that only partially objective accounts of the world can be produced, for all methods for examining such accounts are flawed” (Denzin and Lincoln, 2005, p.27). These alternative paradigms will now be considered.
As stated above, the positivist paradigm has its philosophical origins in the approach to the pure and applied natural sciences (Wilson, 2009). The approach is based on the belief that everything can be measured, it assumes an objective world and is concerned with exploring that world by establishing facts through using experimental and observation methods (Gephart, 1999). This view accepts that aspects of the world can be represented by variables which can be isolated and measured. In contrast to this, metaphysics is based on abstract theorising because the phenomena under investigation prevents direct measurement. An example would be astronomy (Wilson, 2009). The process of deductive research begins with a theory and tries to find evidence to support or reject it as shown in Figure 3.1.
Figure 3.1: Deductive research process
[pic]
(or not, as the case may be).
Source: (Trochim, 2007, p. ‘Deduction and Induction’)
The process of inductive research starts out to observe, identify patterns or themes, and deduce a theory, as shown in Figure 3.2. Also, this is what precedes deductive research.
Figure 3.2: Inductive research process
[pic]
Source: (Trochim, 2007, p. ‘Deduction & Induction’)
The phenomenological researcher believes that his/her involvement introduces an inherent bias (the phenomenological or relativist view).
2. Ontology and Epistemology
The process that every researcher goes through in order to determine his or her research paradigm (his or her ‘world view’ or set of basic beliefs) is to work out, what Cresswell terms, their five philosophical assumptions, these being their ontology and epistemology, their related axiology (values system) and preferred rhetoric, and then finally the methodology that fits best with both their chosen philosophical paradigm and also the subject area that they are intending to research. Guba and Lincoln pose questions to enable this process:
Ontological question:
What is the form and nature of reality and, therefore, what is there that can be known about it?
Epistemological question:
What is the nature of the relationship between the knower or would-be knower and what can be known?
(Guba and Lincoln 1994, p.108)
Ontology places the researcher somewhere on a continuum from realism to nominalism. At one end of the spectrum you believe that reality is a ‘hard’ and objective nature of things that exists independent of an individual’s appreciation of it, and at the other, reality is constructed by us as individuals and we describe that reality by the use of labels or names. Hence the nominalist is in the same region of the spectrum as the constructivist. The researcher’s ontology is based on a belief that there is not one single objective reality – tending to believe that everyone’s reality is slightly different, depending upon one’s position, based on experience. This, therefore, puts the researcher fairly close to the constructivist end of the spectrum in Figure 3.3.
Epistemology ranges from positivism to anti-positivism, constructivism or phenomenology. In fact, there would seem to be some debate about the fundamental positions of epistemology. As seen earlier, Burrell and Morgan (1979) show positivism and anti-positivism at either end of the continuum, whereas Jankowicz (2000 Table 6.1, p.113) shows the construct as positivism to constructivism and Easterby-Smith, Thorpe and Lowe (1991) show the two main traditional philosophies as positivism and phenomenology.
Epistemology places the researcher somewhere on a continuum from positivism to anti-posivitism. Guba and Lincoln show four epistemological positions, positivism, post-posivitism, critical theorism and constructivism, and they show examples of typical positions on selected practical issues under each of these four epistemological standpoints. The researcher’s epistemology is based on a belief that the researcher cannot be remote and objective about the individuals that are the subject of his or her research. This puts the researcher at the anti-positivist end of the spectrum in Figure 3.3.
The various approaches using the subjective-objective dimensions outlined in Burrell and Morgan (1979) are:
Figure 3.3: Subjectivist to Objectivist Approaches
Subjectivist Objectivist
Approach Approach
Nominalism Ontology Realism
Anti-positivism Epistemology Positivism
Voluntarism Human nature Determinism
Ideographic Methodology Nomothetic
Source: (Burrell and Morgan, 1979, p.3)
From Kelemen and Bansal’s (2002) analysis of the academic versus practitioner dichotomy, they concluded that there are fundamental differences in research intended for an academic or a practitioner audience. The impact of a piece of research conducted using quantitative methods or a deductive process would be likely to have a negative impact upon a practitioner audience.
3. Validity and Reliability in Qualitative Research
Guba and Lincoln (1994) identified three paradigm assumptions that link particular choices of validity procedures, which they labelled as post-positivist, constructivist, and critical influence research (Cresswell, 1998). It is necessary to take these three paradigm assumptions one by one. Firstly, the modernist approach seems the most seriously flawed. How can the mere assumption “that qualitative research consists of rigorous methods and systematic forms of inquiry” have any credibility? It would seem to play into the hands of the critical quantitative researchers. Secondly, the labels of trustworthiness and authenticity allocated by the constructivists – these seem to align with Cresswell’s ‘prolonged engagement and persistent observation’. This coincides also with Fetterman’s contention that “working with people day in and day out, for long periods of time, is what gives ethnographic research its validity and vitality” (Fetterman, 1989, p.46). It therefore seems reasonable to conclude that the closer the relationship between the researcher and the actor, and the longer the duration, the higher the reliability of the findings will be.
There are two strands to this position. One being the necessity to incorporate the researcher’s, as well as the actor’s, personal bias, which everyone automatically carries. The second being a similar ethic to the Marxist ideal that implies that the critical theorists’ perception is not that they seek to interpret or understand the world, but that they require their adherents to change it. Any follower of this epistemology must, by definition, already be a long way removed from a quantitative/positivist position, and thus more inclined to accept the standards of verification of qualitative research.
There are fundamental challenges in undertaking qualitative research whilst upholding the more traditional principles of validity and reliability associated with quantitative research methods. The natures of reality or different realities, and of qualitative research itself, need to be understood. An individual’s epistemology may influence his or her view of the validity and reliability of qualitative research. The traditional principles of validity and reliability are associated with quantitative research and there is contention as to whether they may be used appropriately in the world of the qualitative researcher. There are some fundamental criticisms of qualitative research, and they may or may not be justifiable. Cresswell (1998) put forward eight popular verification procedures used in qualitative research and recommends that the researcher adopts at least two. The researcher must ask themselves whether they can maintain standards in qualitative research equivalent to the standards traditionally associated with quantitative research.
All individuals are different, and all have their own ‘reality’. Different individuals will interpret the same experiences in different ways (Dowd and Pace, 1989). The qualitative researcher refers to this individual perspective as the lens through which he/she approaches the study, and uses a viewpoint for establishing validity in a study.
“Qualitative inquirers may use a second lens to establish the validity of their account: the actors in the study. The qualitative paradigm assumes that reality is socially constructed and it is what actors perceive it to be. This lens suggests the importance of checking how accurately actors’ realities have been represented in the final account. . .
A third lens may be the credibility of an account by individuals external to the study.”
(Cresswell & Miller, 2000, p.125-6)
Cresswell (1998) identified five traditional approaches to qualitative research, each coming from different perspectives. These are the historian’s biography, the psychologist’s phenomenology, the sociologist’s grounded theory, the anthropologist’s ethnography, and political scientist’s case study. He assessed quality standards, verification and validity, and identified eight popular verification procedures used in qualitative research:
• Prolonged engagement and persistent observation.
• Triangulation.
• Peer review and debriefing.
• Negative case analysis.
• Clarifying researcher bias from the outset.
• Member checks.
• Rich, thick description.
• External audits.
(Cresswell, 1998, p. 201-203)
He recommends the qualitative researcher to engage in at least two of them in any given study.
15. Methodological choice for this study
1. The concept of the research
The concept of the research was inductive in nature, to establish from the ground up the actual practices in major negotiations between buyers and sellers. The intention was to use a qualitative study, and starting from a blank canvas, attempt to be unbiased and open in asking semi-structured questions to learn from senior negotiators how they approach and conduct negotiations.
2. Research Design
The purpose of this work is to derive empirical data directly from negotiators, primarily purchasing practitioners, in order to develop an understanding of how they really negotiate. This can then be compared to the extant theoretical base of knowledge on the subject. This research is predominantly post-positivistic in approach in its use of in-depth semi-structured interviews as the primary data collection tool, and subsequent qualitative analysis techniques. A post-positivist approach is one from a perspective that believes the researcher needs context and that context free experimental design is insufficient. As a secondary data collection method, two questionnaires were sent to all of the actors. These questionnaires are important because they have become well-established in the study of negotiation in the emerging procurement profession. The first questionnaire, originally used by Karrass (1968) in his doctoral research, seeks the perceptions of the actors on the relative importance of thirty-four qualitative characteristics of negotiators. The second questionnaire, devised by Murray (1986), seeks their beliefs relating to ten pairs of binary variables relating to how negotiators behave, and is aimed at establishing whether the negotiators favoured adopting an adversarial or a collaborative approach to negotiation.
There were two reasons for asking the selected actors to complete these questionnaires. Firstly to establish how the perspectives of this sample of senior negotiators differed from those of the people questioned in the earlier surveys, (which may not have been as experienced in negotiation), and secondly, to provide verification of the actors’ perspectives given in the interviews. It was anticipated that a 100% response to the questionnaires would be possible, because of the rapport established with each of the actors during the in-depth interviews, and indeed this proved to be the case, although several of the respondents needed considerable chasing up to complete them.
3. The rationale for the interview methods
The choice of interview method was to use semi-structured questions in face-to-face interviews, recorded on a digital voice recorder and professionally transcribed to ensure minimal, or no loss, of data. The rationale for this method was to enable the same questions to be asked of all actors as a common start point, but with the flexibility to pursue unusual or interesting answers. Accurate transcription ensured critical analysis and clear understanding of the points made.
4. The rationale for the survey (questionnaire) methods
Two questionnaires were sent to the actors. The first to seek their perceptions on the relative importance of a series of thirty-four qualitative characteristics of negotiators, and the second to seek their beliefs relating to ten pairs of binary variables relating to how negotiators behave. Both of the questionnaires had been used previously, producing interesting results. Questionnaire 1 originates in Raiffa (1982, pp.120-121) adapted by John Hammond from Karrass (1968, pp.242-244). It was subsequently re-used by Harwood (2003). Questionnaire 2 originates from Harwood (2003, p.42) adapted from Murray (1986). The rationale for this method was to enable responses to questions received from the interviews to be compared with similar questions in the questionnaires as a cross correlation. Moreover, responses to the same questions can be compared from previous surveys.
5. Reliability
In order to avoid bias, the sample was drawn of individuals with a range of experience of negotiations from a broad cross section of different industry sectors. One of the main difficulties in qualitative research is to recognise the scope for researcher bias and how it has been managed. This research will not have external validity (nor is it meant to), but it does need to have internal validity and a degree of integrity.
6. The relationship between research objectives and research methods
The research objective was to understand what really happens in negotiations between buyers and sellers. The researcher found it necessary to establish a relationship between himself and each of the research actors, such that they would feel comfortable in confiding with him their thoughts, motives, aspirations and actions in negotiations. Semi-structured interviews were ideally suited to this objective, in that they were structured sufficiently to be able to compare basic responses, but unstructured enough to allow the actors to answer in their own way and digress from the main point to add anything that they felt was important to them. An initial introduction and background conversation was used in order to establish a rapport with each of the actors, putting them at ease, and this worked well in all except one interview. The single exception was one of the shortest interviews, in which it was difficult to elicit much more that yes or no answers to most questions from this actor.
16. Selected Research Design
1. Considerations
The primary consideration in the design of the research was to give voice to real buying and selling negotiators. The findings of the research should reflect the beliefs, perceptions and understanding of the actors, represented using their own words.
2. Qualitative Study
The methodology which seemed the most appropriate fit to this research was a qualitative study, as qualitative methods are often used for inductive research introduced by Glaser and Strauss (1967). Constant comparison and theoretical sampling are used to support the systematic discovery of theory from the data (Boeije, 2002). Thus theories remain grounded in the observations rather than generated in the abstract. Qualitative research can be a popular approach for people exploring a new area of research. The theory developed from the data can then be tested by further research.
3. Overview of Adopted Research Approach
The final research methodology adopted was a qualitative study comprising a series of twenty semi-structured interviews, followed by two questionnaires completed by the same sample of twenty participants. Through this process in Phase 1 the initial interviews evolved from a series of semi-structured questions through the deliberate practice of allowing the actors to digress into other topics, and then pursuing these new ideas, incorporated into the questions in subsequent interviews. In this way revelations that emerged unprompted from interviews are captured in the findings.
It was anticipated that around 12 to 15 in-depth interviews with very senior and very experienced negotiators might provide sufficient data. The adopted methodology of using the grounded theory technique of theoretical sampling meant that it was not known to what extent the lines of questioning would evolve, or in what direction.
In Phase 2, two different questionnaires were sent to the same actors who had been interviewed, immediately following their interviews. This was intended to provide triangulation. These questionnaires are important in that they have become well-established in the study of negotiation in the emerging procurement profession. The first questionnaire, initially used by Karrass (1968) in his doctoral research, seeks the perceptions of the actors on the relative importance of thirty-four qualitative characteristics of negotiators. The second questionnaire, devised by Murray (1986) seeks their beliefs relating to ten pairs of binary variables relating to how negotiators behave, and is aimed at establishing whether the negotiators favoured adopting an adversarial or a collaborative approach to negotiation.
The reasons for asking the selected actors to complete these questionnaires were: firstly, to establish how the perspectives of this sample of senior negotiators differed from those of the people questioned in the earlier surveys, (which may not have been as experienced in negotiation), and secondly, to provide verification of the actors’ perspectives given in the interviews. The questionnaires asked them to state preferences and give a triangulation on the conclusions derived from the rich data gained from the interviews. Rich data, or rich descriptions, as the terms imply, contain a high level of detail, often this is from ‘open’ questions and from information volunteered by actors in semi-structured interviews (Denzin and Lincoln, 2005).
4. Researcher’s Interview Experience
The researcher had gained experience by conducting twenty-four semi-structured interviews whilst undertaking a master’s degree in 2002-2003, in addition to conducting employment interviews in his working roles over many years.
5. Selection of Actors
The most important criterion in the selection of actors for the core research is that this sample conforms to the ‘real buyers and sellers’ sought by the researcher to be representative of senior and highly experienced negotiators in buying/selling negotiations. The actors for the core research were selected primarily on two major criteria, these being the size of their employing organisation (15 of the 20 were, or had been, employed by organisations with multi billion pound turnover including the two lawyers, whose clients met the same criteria), and their years of experience as a professional negotiator either as a buyer or seller or both. Otherwise the selection was a sample of convenience, based on the participants being available to be interviewed in London.
Thirteen interviews were completed between 13th June and 29th October 2008. After reviewing the data from these interviews, and the new areas identified which required further investigation, a further six interviews were arranged and these were completed between 6th January and 1st March 2009.
All of the twenty actors had ten years or more experience as professional negotiators and six had more than 20 years experience. This criterion is believed to give the sample real value in research terms, making them what Spradley (1979) describes as ‘excellent informants’ in that they are closely aligned to the subject of the research. The initial pilot interview took place on 13th June, 2008. The remaining 19 interviews took place between 19th August 2008 and 21st December 2009. The interviewees were a convenience sample to the extent that 17 of the 20 actors were interviewed in London, either at the actors’ office or at the researcher’s office, two were interviewed at the researcher’s home and one was interviewed at the actor’s home, all in order to minimise inconvenience to the actors. All of the other criteria, including the actors’ education, professional membership and the value of the negotiations they had worked on, were not discovered until the time of the interviews.
17. Phase 1: The Interviews
1. Aims
The primary aim was to explore the genuine beliefs, perceptions and understanding of the actors, all experienced senior negotiators, concerning how they have experienced negotiations between buyers and sellers. Part of the primary aim was to gain clarity around whether the actors were aware of the existing knowledge base of the subject, and whether they agreed or disagreed with some of the dominant discourses within it.
2. Design
1. Phase 1 - Interviews
The design of the interview structure for the core interviews on negotiations began as a series of basic questions that emerged from the literature review. These corresponded directly to the main themes identified under the major headings. The interviews were semi-structured and questions were added to the list during each interview for the first six interviews. After that occasional additional questions were added or, in some cases, questions were refined to give clarity when actors had difficulty understanding what was being asked. The design ended up with 13 major questions, each with up to ten sub-questions or variations. The questions evolved following each successive interview until there were no further changes. This process is known as theoretical sampling (Cresswell, 1998, p.118).
Background and Introduction for actors
Before the interview the objectives were explained and confidentiality and anonymity were assured, and two copies of an Agreement of Informed Consent were signed by the researcher and the actor. Each actor was presented with a letter and an agreement of informed consent (see Appendix 2). Each kept a copy. The letter explained the purpose of the research including the interviews and how they were intended to be recorded, transcribed, analysed and stored in future. All of the actors consented to their interviews being recorded.
Initial Interview
In the first interview the actor responded to semi-structured questioning and spoke largely uninterrupted about his experiences of negotiations as a seller over a seventeen year period whilst running his own business. Following analysis of the transcript of the pilot interview, the questions were refined and were then further developed into a series of semi-structured questions, which were used in subsequent one-to-one personal interviews. Semi-structured questions enable flexibility in interview design and conduct, resulting in rich data for subsequent analysis (Horton et al., 2004).
Interview Questions
The questions asked in the core interviews covered thirteen key areas and evolved to the final state as shown in Appendix 1.
Data collection
Potential actors were identified as being senior negotiators in buying or selling roles in large organisations. These were informed about the objectives of the research and invited to participate. Interview dates were arranged with all those who consented, the majority of interviews being scheduled in London at the researcher’s place of work. The interviews lasted between 50 and 151 minutes. The interviews were semi-structured, commencing with a list of set questions. The set questions were asked of all actors and subsidiary questions were added to expand their replies and clarify points made. If the actor made a new point, not mentioned by previous actors, then further clarity was usually sought. If the point was considered significant it was added to the set questions for future interviews. The recordings of the interviews were subsequently transcribed into Microsoft Word documents.
Method of data analysis
This section of the chapter describes the process used to analyse the data gathered in response to the questions asked in the interviews. The interview transcripts consisted of 34 hours and 42 minutes of digital recordings, and these were professionally transcribed into Word documents. The documents then needed to be analysed to conduct a ‘serious inspection’. A software package called NVIVO had been suggested for use in the analysis, and initially version 2 of this software was tried. However, the software was not intuitive, was very time consuming to use, and offered no apparent benefits over the two mainstream Microsoft software packages familiar to the researcher, Word and Excel.
Open coding, bracketing, theming and categorisation
The interview transcripts had been typed in Microsoft Word and this software has an adequate search facility called ‘Find’ which locates every instance of a word or phrase in a document. For example, a search on the word ‘power’ will reveal all instances of that word including all of the questions relating to ‘power’ that were asked of the actors. NVIVO was abandoned for five reasons. First, the researcher had wasted many hours trying to overcome this user unfriendly software. Second, the researcher was already very familiar with using the Microsoft Excel spreadsheet program for sorting data, both numerical and English language, and, therefore, further time and energy could be saved by not having to learn how to use another software program. Third, the data could easily be entered into the spreadsheet by copying and pasting narrative extracts from the Word documents containing the interview transcripts. Fourth, no special formatting was required. Fifth, the spreadsheet was easily updated, edited and revised as the transcripts were further interpreted on listening to the original audio recordings a second time.
The first stage of analysis in grounded theory is known as open coding, in which the researcher forms initial categories of information, in order to open the data ready for analysis (Cresswell, 1998). To commence open coding all of the transcripts were combined into one large Word file of 329,000 words covering all of the twenty-two interviews. Word was, therefore, used for gathering the data in response to the questions and for initial analysis of the data. This enabled all of the themes to be searched.
Coding or categorisation of the data was conducted by analysing the interview transcripts and transposing these from Word into an Excel spreadsheet. This enabled line by line analysis. This was done by establishing a network of themes or ‘nodes’ upon which to code the content of the interview transcriptions. The first stage of coding was based on a small number of nodes corresponding to the original list of questions asked of the actors at the start of the field research. This list of primary themes included power, arms-length/adversarial, personality, partnerships, trust, negotiator characteristics, preparation, planning, price, persuasion methods, and contracts. The full list of questions shown in Appendix 1 is what the list had evolved into by the final interview on 21st December 2009. As can be seen, this list contains themes and categories bracketed together, within the subject of negotiations, into a structure primarily informed by the CIPS syllabus on negotiation. All responses to the questions were classified and categorised against this set of themes and categories.
After these nodes of primary themes had been used to code the data contained in the interview transcriptions, secondary themes and concepts began to emerge as often found to be present alongside the primary ones. The list of nodes grew to around three hundred and this was found to be unmanageable, not least because many nodes were closely linked to others and considered too similar to stand alone. A rationalisation exercise was then undertaken and the resulting number of nodes was reduced to just over one hundred.
Representative nature of views
When an actor gave a response or made a statement that was a departure from previously expressed views of other actors, further clarification was sought in order to ensure that the new and non-representative viewpoint was captured accurately.
Selection of representative quotation extracts
The researcher wanted to cite extracts from the transcriptions of interviews which contained responses or statements that were representative of the group of actors that had expressed similar views. It was important to the researcher that the views and beliefs of the actors should be grounded in the voices of the actors themselves. The method of selecting these quotes was a form of content analysis known as ‘open analysis’ (McKeone, 1995). Open analysis consists of identifying the dominant messages and subject matter within a sample of text, unlike ‘prescriptive analysis’ in which the text is analysed for a narrowly defined set of communication parameters.
Missing or unusable data
Upon receipt of each interview transcript, all missing or unusable data was highlighted in the Word document. The original audio recording was then replayed using Microsoft Windows Media Player and the missing elements were replayed until they could be understood. They were then corrected in the Word document. These were mainly technical or unusual terms that were not known to the transcriber.
2. Phase 2 – Questionnaires
It was decided to take the list of thirty-four characteristics of effective negotiators first researched by Karrass in the 1960s and subsequently ranked by different groups of negotiators for Raiffa (1982) and then again by Harwood (2003) in the belief that this would provide a comparable insight into the perceptions of the actors in this research.
Questionnaire 1 is entitled ‘Perceptions of the importance of Effective Negotiator characteristics’. In Questionnaire 1, initially the pilot actor was asked to rank the thirty-four characteristics in order of importance. Feedback from the actor indicated that the questionnaire took around twenty minutes to complete, and took considerable concentration in order to satisfactorily rank all thirty four characteristics. The actor said that completing the questionnaire was onerous and suggested a simpler ranking would be less onerous and time-consuming if it could fulfil the intended purpose. Questionnaire 1 was therefore modified so that actors were asked to group the thirty-four characteristics into three categories, being high, medium or low importance. In addition, they were asked to rank their top five most important characteristics.
Questionnaire 2 is entitled ‘Negotiator beliefs’. In Questionnaire 2, the actors were asked to select their preferred choice from ten pairs of statements, each pair containing a ‘distributive’ and also an ‘integrative’ statement. Questionnaire 2 was less onerous to complete, and took less time, so based on the feedback it was not modified.
Aims
The purpose of the questionnaires was to obtain descriptive data to add perspective for the reader. It was accepted that the sample of twenty actors was a sample of convenience, not a random sample, and also it was too small to be used for inferential analysis, as the minimum theoretical sample is thirty, according to the Central Limit Theorem in statistics. Anderson et al (2003) recommend that a sample size of 30 or more is taken to satisfy the large-sample condition of the central limit theorem. This means that only factual statements (the responses received) may be used for descriptive purposes, and nothing is inferred or concluded from the responses, beyond the statement of preferences of the sample of actors in this study. No conclusions around generalisability can be deduced from the questionnaires.
Questionnaire design
The design of Questionnaire 1 originates in Raiffa (1982, pp.120-121) adapted by John Hammond from Karrass (1968, pp.242-244). It was subsequently re-used by Harwood (2003). The design of Questionnaire 2 originates from Harwood (2003, p.42) adapted from Murray (1986).
Data collection
The two questionnaires were e-mailed to actors immediately following their interviews. If no response was received they were expedited after two weeks. Ultimately a response rate of 100% was received.
Method of data analysis
Questionnaire 1
All of the actors were sent the questionnaires and asked the question:
“Please rank the following characteristics of negotiators in importance into High, Medium or Low importance and indicate with H, M or L in column B. (There should be 11 in the High and Medium groups with 12 Low).”
The responses were analysed by a simple count, due to the sample of twenty-one actors being too small to be used for inferential analysis. For Questionnaire 1, the numbers of High, Medium and Low responses were counted, along with the ranking of the top five. The data was then presented showing the characteristics in ranked order of preference from high through medium to low, showing the preferred ranking as indicated by the actors.
Questionnaire 2
All of the actors were sent the questionnaire by e-mail following the interview and asked the question:
“Please select one from each pair of negotiating tactics to indicate your preference.”
For Questionnaire 2 the number of responses selecting each of the pair of opposing statements was counted. The data was then presented showing the statements ranked in order of preference from the highest to the lowest as indicated by the actors.
3. Phase 3 - Presentations of Initial Findings and Feedback
In Phase 3, the initial findings were presented to two specialist groups of Subject Matter Experts. The first was to the CIPS Beds & Herts Branch, on 7 July 2009, and the second to a group of senior managers, trainers, researchers and consultants at Huthwaite International, Wentworth, Yorkshire, on 4 September 2009. These presentations were intended to be, and were, interactive sessions in which the audience participated in a dialogue and gave feedback on the findings. The feedback was then incorporated into the discussion and incorporated into the findings. By coincidence, there was one key piece of feedback from each of the presentations.
18. Ethical considerations
There are four main ethical principles within social research, and these are: whether actors may be harmed, informed consent, invasion of privacy and deception (Bryman, 2004). These principles underpin the Non-Specialist Ethical Guidelines for Research of the University of Glamorgan, which additionally assure actors of confidentiality and anonymity, fair treatment and research conducted with integrity. This research has been conducted in compliance with the Non-Specialist Ethical Guidelines for Research of the University of Glamorgan (Appendix 3) and also the IPSERA Code of Ethical Research Conduct (Appendix 4), both in its design and implementation.
1. Consent
A letter of ‘Agreement of informed consent’ was prepared for each individual actor in the research. This is a joint undertaking signed by both the interviewer and the actor, laying out the principles upon which both undertake to conduct the interviews (Appendix 2). The letter is both the actor’s agreement of informed consent and the researcher’s agreement to undertakings of confidentiality and anonymity, purpose of research, and ownership and access to the data. All actors were given a copy of their own letter and copies of the Non-Specialist Ethical Guidelines for Research of the University of Glamorgan and the IPSERA Code of Ethical Research Conduct.
2. Actors rights
Core participants
The rights of actors were considered at all stages of the research. As well as obtaining agreement of informed consent in writing from all actors, at the beginning of each interview, actors were reminded that they were free to withdraw from the research at any time and that their participation was entirely voluntary. They were also reminded that the recorded interview, its transcription and any related analysis would be kept secure and used only for the purposes of this research and any publications, conferences including possible broadcasts on radio or TV. They were assured that their names and those of their organisations would remain anonymous at all times. All actors indicated they were comfortable with the assurances given.
19. Summary
This thesis uses qualitative research from a post-positivistic perspective, using interviews as the primary data collection method. The first phase uses semi-structured interviews to investigate two specific areas of context.
The first phase uses semi-structured interviews in an inductive reasoning manner to gather data by observation, (how they negotiate), establish patterns from which to draw tentative hypotheses, and then worked through these to establish, and/or modify existing theories. Semi-structured interviews were undertaken with a sample of buyers and sellers with extensive negotiation experience. In addition, as a second phase, each actor was asked to complete two questionnaires, one based on a ranking of importance of negotiator characteristics previously used by Raiffa (1982) and Harwood (2003), a second based on the two competing theories of negotiation adapted by Harwood (2003) from Murray (1986). The scope within qualitative research for researcher bias was identified and managed in order to have internal validity and integrity by:
A) Careful structuring of the questions to deliberately avoid ‘leading the witness’. Questions were worded in an open manner in order to allow a variety of interpretations. In the early interviews they proved to be too obscure, with a lack of clarity as to what was being asked, but the questions were adjusted in the first seven interviews to the point where clarity around the question still did not lead the actor in a particular direction.
B) Asking all actors the same questions. The only change after each subsequent interview was to add new questions relating to new avenues of research that emerged from the interviews.
The second phase, the questionnaires, was intended for triangulation purposes, by asking each actor to complete two exercises: the first asked them to divide thirty-four statements about negotiation into three categories, being in their opinion of ‘high’, ‘medium’ or ‘low’ importance, and in addition to rank their top five. The second exercise gave ten pairs of alternative options, and the actors were asked to select their preferred choice from each pair.
The method, conducting a qualitative survey using semi-structured interviews of twenty individuals in top management positions, experienced in negotiating multi-million £ projects over many years, gives a robust method to provide the contributions to knowledge and practice. This criterion is believed to give the sample real value in research terms, making them what Spradley (1979) describes as ‘excellent informants’ in that they are closely aligned to the subject of the research.
There were three limitations to the methods employed. Firstly, the study is based on a sample of convenience, in that most of the actors were available for interview in London. In the event, seventeen of the twenty interviews took place in London.
Secondly, the study relies on qualitative methods. Consequently external validity is limited and can only be generalised if a quantitative study was designed, administered and the data analysed. This is outside of the scope of the aims of this work but is in scope for further research. This study would enable such further work to be considered.
Thirdly, a limitation was the large amount of data gathered during the interview phase of the field research, much of which was not able to be used due to the challenges of consolidation and analysis. This was of particular concern where the actors made passing reference to issues either by implication or nuance, though not explicitly.
This chapter has established the rationale for the methodological approach adopted for the research, described the selected research design, and detailed the research methods employed. The next chapter presents the findings from the field research.
CHAPTER 4: FINDINGS AND OBSERVATIONS
4. Introduction and chapter overview
The purpose of this chapter is to present the findings and observations of the research from the primary data collected. Chapter 3 outlined the research design, methodological choice, and methods employed to carry out the research. This chapter builds on the previous chapter by presenting the findings from the three phases of research.
It is perhaps worth noting that the interview phase of the field research generated a large amount of rich data from the 20 interviews. This thesis presents the key findings from this large volume of data. The qualitative approach adopted for this thesis consists of an evolving base of semi-structured questions from the interviews yielding rich data. Rich data, as the term implies, contains a high level of detail, which goes beyond the simple answers to the questions and reveals a deeper insight into the negotiators interviewed and the methods they use.
In the field research, interviews were conducted with all 20 actors, first interviews to build profiles of them as professional negotiators, which were used to build a rapport with the negotiators, and then semi-structured interviews were conducted with them. The data collected from the transcribed interviews was analysed. This chapter of findings uses some of the words of the actors themselves and includes their feelings, beliefs and motives about the way they approach their work as negotiators to the extent that these can be ascertained from the interview transcripts.
No interview transcripts are included in this thesis due to strict confidentiality undertakings agreed with all core actors. In Phase 2 of the field research, two different questionnaires were completed by all 20 of the actors and the responses are summarised. Phase 3 of the field research documents two interactive presentation sessions where the researcher presented his initial findings to two professional special interest groups, CIPS Beds & Herts Branch, and a group of senior managers, trainers and consultants at Huthwaite International. This chapter outlines the interactive presentations at which initial findings were presented and discussed, and presents feedback received from the presentations.
20. Findings from Interviews
An initial interview was conducted in June 2008 using several scoping questions that had emerged around the key themes that emerged from the literature review. In the initial interview the actor, Adam, responded to semi-structured questioning and spoke largely uninterrupted about his experiences of negotiations as a seller over a seventeen year period whilst running his own business, supplying biscuits and ‘cookies’ to a range of specialist stores and some of the UK supermarkets.
Several findings emerged from the interview. Adam believed that a) bullying of small suppliers by major UK supermarkets was endemic; b) it is common for no written contracts to be issued by the major supermarkets to many smaller suppliers (employing 50 or less people); c) small suppliers were constantly under explicit threats of losing the business of major UK supermarkets, if they did not comply with onerous demands, usually for price reductions; and d) it was commonplace that the smaller suppliers would ultimately suffer termination of the business and it would in many cases be awarded to their competitors, often based on the deposed suppliers’ own recipes.
1. Profiles of actors
From the preliminary profile questions asked prior to the core interviews, the actors revealed the profile information about themselves shown with their pseudonyms in Table 4.1. The most important criterion in the selection of actors for this research is that this sample conforms to the ‘real buyers and sellers’ sought by the researcher. As mentioned in Chapter 3, the sample of actors was selected primarily on one major criterion, this being the number of years of experience as a professional negotiator. All of the 20 actors had ten years or more experience as professional negotiators, and six had more than 20 years experience. These criteria are believed to give the sample real value in research terms. 17 of the 20 actors were interviewed in London. The actors were asked profile questions in order to establish a rapport with them at the start of the interviews.
The sample is considered representative of the population of senior negotiators occupying top management positions with extensive experience of negotiating multi-million pound contracts in the B2B buyer-seller context.
Table 4.1: Overview of Research Actors
|Interv|Name |Job Title |Negoti|Buying or |Organisation |
|iewee | | |ator |Selling | |
|No. | | |experi| | |
| | | |ence | | |
| | | |years | | |
|Core Interviews | | | |
|1 |Adam |Chairman |17 |Selling |Food manufacturing company |
|2 |Ben |Head of Commercial Practice |10 |Both |Law firm |
|3 |Carl |Procurement Contracts Manager |29 |Buying |Multi-national computer sales |
|4 |David |Client Services Delivery Manager |11 |Selling |Global technology & document |
|5 |Eric |Director of Procurement |29 |Buying |National communications |
|6 |Alice |Managing Director |20 |Buying |Bank |
|7 |Frank |Director |22 |Buying |e-sourcing specialist |
|8 |Graham |Head of IT Procurement |20 |Buying |Bank |
|9 |Harry |Head of Procurement |10 |Buying |Government Department |
|10 |Ivor |Managing Director |24 |Buying |Various industries |
|11 |Barbara |Strategic Sourcing Manager |23 |Buying |Big Four' Audit & Accounting |
|12 |James |Alliance Sales Director |10 |Buying |Global Consulting Firm |
|13 |Ken |Director of Outsourcing |10 |Buying |Bank |
|14 |Christine |Director, Procurement & Revenue Protection|20 |Buying |Public sector corporation |
|15 |Len |Global Account Manager |17 |Selling |Global communications |
|16 |Denise |SBU Services Director |13 |Both |Multi-national computer sales |
|17 |Elizabeth |Group Procurement Director |18 |Buying |Various industries |
|18 |Mike |Partner, Head of Technology |16 |Both |Law firm |
|19 |Norman |Non Executive Director |30 |Buying |Plumbing supplies |
|20 |Oliver |Global Business Manager |30 |Selling |Global technology & document |
All of the actors have been given pseudonyms to protect their identities.
1. Buyers and Sellers
The sample included both buyers and sellers as follows: 13 buyers with that as their primary role, four sellers with that as their primary role, and three working in dual buying and selling roles.
2. Years experience as professional negotiator
The actors’ years of experience as professional negotiators ranged up to 30 years. In all the 20 actors had cumulative experience of 379 years; four actors had over 28 years experience, six more had 20 years experience or more, a further four actors had 15 years experience or more, and all twenty had 10 years experience or more. The mean average experience of the actors was 18.95 years. This data seems to show that the interviews were conducted with actors who fulfilled the criteria of negotiators with the appropriate experience. These are shown in Figure 4.1.
Figure 4.1: Actors’ years experience as professional negotiator
[pic]
3. Diversity of actors
The sample selected was not intended to have external validity (Campbell and Stanley, 1963). However, in order to avoid bias, the sample was drawn from negotiators with a broad cross-section of different industry experience from sectors including banking, finance, food, e-commerce, computing, telecommunications (fixed and mobile), government, consultancy (including Business Process Outsourcing and offshoring, Systems Integration, procurement and software consultancy), a public sector corporation, education, construction, law and wholesale plumbing supplies (see Figure 4.2).
Figure 4.2: Industry Sector of Actors
[pic]
The profiles above show that the actors are, therefore, suitable for this research and enabled the capture of valid and useful data.
21. Main findings of interviews
The presentation of the findings from the analysis of the core interviews is structured in line with the major themes that emerged from the interviews as the questions developed. The major themes categorised from the literature review were:
1. Integrative negotiations
2. Power in negotiations
3. Inter-personal chemistry between negotiators
4. Persuasion techniques
All of the questions asked in the interviews are shown in Appendix 1. The actors volunteered views, opinions and perspectives beyond the issues identified in the questions, and these have also been analysed and presented.
1. Theme 1: Integrative Negotiations
1. Q 5 “Have you heard of negotiations described as integrative and distributive?”
(Deliberate closed question initially)
Of the 20 actors interviewed, all except three actors replied that they had not heard of negotiations described as integrative and distributive. Two said that they were not familiar with the terms, but if they knew what they meant they might be familiar with them. Only one actor was familiar with the terms. The sole actor familiar with the terms integrative and distributive negotiation had moved from being a purchasing practitioner via academia (an MBA), to being the principal of a training and education organisation. The individual is also an examiner on negotiation for CIPS and is, therefore, familiar with the syllabus. This provided strong evidence that the terms integrative and distributive negotiation are academic terms, used only by academics, and unknown to practising negotiators.
When all negotiators except one had stated that they were unfamiliar with the terms, the question was re-phrased as “Have you ever heard negotiations described as collaborative or adversarial, or win-win and win-lose, or ‘partnership’?” This time the response was positive from all 20 actors. After pursuing their response to the above question, all actors were then asked “Do win-win negotiations actually happen in practice, in your experience? In summary, the responses were divided into three who replied positive and 17 who replied negative. However, this breakdown does not tell the whole story. It became clear to the researcher that of the three actors who replied positive all had differing perspectives relating to the question and different caveats or reservations about their responses, which they shared.
Three respondents of the 20 replied that win-win negotiations do actually happen in practice. However, although these might strictly be accepted as positive responses indicating that ‘win-win’ deals are possible, it is clear from the words used by the respondents that they do not have a conventional belief that win-win works in practice. For example, Harry expressed the simple view that:
“If we’re getting a service, and the supplier is still surviving, that must be a win-win.”
Similarly, Elizabeth said:
“You get win-win all the time because, in reality, (the supplier) wouldn’t supply if (they) weren’t happy, so I think you always get to a win-win.”
Only one actor, Oliver, had a good example of a win-win working in practice, and he explained in detail why it worked out to be a win-win:
“One of the smartest guys, (the) best salesman I ever worked with, he actually early on . . . he sold a number of our high end production printing products to the customer at list price.
“However, the way he did that was he got in that organisation in a manner that no-one had before him. He looked at all of the various applications for that equipment and identified applications that were going externally from the organisation. He redesigned the applications and he actually produced extraordinary savings through understanding their business so well that he was actually able to reduce their overall costs by something like 40% to 50%, quantified, and still sell the product that enabled that at list price.”
“So if you take a look at the win-win in that particular instance, the customer derived much more significant value because of the fact that the salesman involved was able to roll up his sleeves, was astute enough to get in and understand the requirements better than the customer, understand their business better than they did and, actually, in the final analysis, delivered greater savings through that process that had they taken 20% off the price of the box, absolutely no comparison.”
The researcher, therefore, believes that two of the actors that indicated they believe that win-win negotiations do actually happen in practice do not in the conventional understanding of ‘win-win’, and that only one out of the 20 actors articulated a convincing belief in ‘win-win’ deals being possible. The other 17 actors out of 20 felt that win-win negotiations do not actually happen in practice. Of the 17 actors that replied negative there were differing levels of emphasis regarding the extent to which they felt that there is no such thing as a win-win, or collaborative negotiation between buyer and seller. What the actors said was revealing about their perspective on ‘win-win’ outcomes.
David said:
“I would suggest, in the majority of negotiations, both parties feel that the other party got the bigger share of the pot, certainly my experience as a sales person - I would always think that it’s the purchaser that is bound to get the better deal, because I’ve had to give away this, I’ve had to give away that.”
Alice said:
“I come from the old school of you do as much as you can for your company and make the other company feel like you’re working together but really you’re not- I call that win-perceived-win.”
Graham said:
“When all the talk of partnership and win-win and all these things came in, I think the guidance from my management at the time was that you should beat the bastards into submission - they’ll know when they’ve reached the point beyond which they won’t go, and I think there’s a lot to that”
Barbara said:
“Not in my experience, no, (win-win does not exist).”
James said:
“I might describe it as we put on a front to instil confidence in the client, ... so we’ll say, “Yes we’ve got the partnerships and we’ve got the skills, and we’ve got this, that and the other, and we can deliver all of this”, and then ...behind the scenes it might be fragmented and messy ... - and so there might be all sorts of adversarial (deals in place) in order to present a very neat, united, single point of contracting for the client.”
Ken said:
“No, don't understand it - so you’re holding them at arms length-... you’re not... partnering with them or collaborating with them in the true sense .... So I think the theory of it is great. - The reality of it, I don’t think it exists.”
Christine said:
“I don’t think you’re ever in a partnership when you’re in a commercial arrangement, actually. I think you’re in a mutually beneficial but guarded relationship.”
Mike said:
“The kind of win-win partnership that puts my teeth on edge is where you get the customer . . . saying, “but, this is a partnership”, when I hear someone saying that, I know absolutely that this is not a partnership - quite the opposite - it’s the customer seeking to screw the supplier, or vice versa. . . I still hear it, but probably less so, partly because everyone’s become so jaded and cynical about it, I think. Because, you know, in 99% of these agreements there’s nothing at all which indicates, factually, a partnership, nothing at all.”
The researcher became familiar with the usual reaction to this question throughout the interviewing process and it was characterised by Ken, who had spent many years as Head of Offshoring for a High Street bank. He had heard of the theory of ‘partnership’ and ‘win-win’ negotiations but he did not understand how they could work in practice. He spoke as though he thought he should understand how it could work in practice, but he did not. He, therefore, concluded that it is great in theory, but he believes it doesn’t exist in practice. Only one of the actors had a convincing story to demonstrate that he believed in win-win.
2. Theme 2: Use of Power and Coercion
Although power and the use of coercion are usually grouped together with the other persuasion techniques, it is here treated separately, as a major theme and one of the research questions of this thesis.
1. “Tell me about the power relationship in negotiations, based on your personal experience - what gives a buyer or seller power in a negotiation?”
Overall 14 out of 20 mentioned the use of power as a negotiation technique they favour. The 14 actors who mentioned power talked about 30 different sources of power. All of the 30 sources of power mentioned were compiled into a list which was then consolidated into seven major themes (see Figure 4.3).
Figure 4.3: Sources of Power
|1 |Power of the seller over the buyer |
|2 |Power of the buyer over the seller |
|3 |Personal power |
|4 |Power of knowledge / preparation |
|5 |Stakeholder power |
|6 |Perception of power equals power |
|7 |Power caused by dependency |
1. Competition as a source of power
Negotiations with suppliers pre-contract are often easier than negotiations post contract, especially whilst there is competition driving the behaviour of the seller pre-contract, according to Denise.
2. Use of reverse auctions as a source of power
The use of reverse auctions was viewed by eight buyers as a source of power for buying ‘commodity’ goods, the most common example given being personal computers. There was consensus among actors that in these circumstances they would consistently achieve significant cost savings the first time a category was auctioned. Graham stated:
“It’s fantastic doing auctions, it’s great sitting there and watching these prices tumble and I haven’t seen one yet where the prices haven’t tumbled. It takes away a lot of your responsibility for trying to find what should be a market point, because you’re going through a close to infinite series of meetings to beat the supplier a little more each time”.
This power is derived from the immediate and direct force of competition on potential suppliers fighting for business.
2. Removal of a negotiating opponent
Four buying negotiators mentioned that if they had been really unhappy with the leading sales negotiator, they had exercised the power of their position and requested the removal of the negotiator.
Typical of these, Christine, a senior procurement director, said:
“I think if you’re dealing with somebody that is not reasonable . . . I can just ring up somebody else who’s more senior than them and say, ‘look, I need to do this in a different way’.”
3. Q 4b “To what extent is the balance of power based on the perception in the minds of the negotiators?”
Six out of 20 believed that power is accrued from their own confidence; whereas 14 did not. As an example, Christine said:
“If you believe that you are the more powerful party, then you are. . . until the other party surprises you.”
4. Q 4c “Are you familiar with the term ‘BATNA’”
(Best Alternative to Negotiated Agreement) (A deliberate closed question)
Only five of the 20 actors interviewed had heard of the term BATNA. Four of the five were in primary buying roles, and the fifth was a lawyer conducting negotiations for both buyers and sellers. None of the negotiators in primary selling roles were familiar with the term. Denise said that she had only ever seen a deal turned down once in her career, and that had been because her organisation concluded that the competition were buying the business to enter the market and could not make any profit at that level of pricing. Carl, a buying negotiator within a selling organisation (a Systems Integrator), said that he could not think of a single example where a deal had been so poor that they had not gone ahead with the purchase. When the term was explained to those who were not familiar with it, some were familiar with the concept but not the acronym.
5. Q 4d “In your experience how often does a negotiator have a real alternative to a poor negotiated agreement? (ATNA)”
Only three out of 20 actors believed that a negotiator often does have a real ATNA. Two of these believed that it is part of the negotiator’s job to create an effective alternative. James had found himself in a situation where his organisation had to spend time and money in order to try to create a realistic alternative due to the hostile way in which they had been approached by an existing supplier, who had accused them (and it later turned out, most of their other customers) of IPR infringement as a short term revenue boost.
In the usual buyer-seller situation, neither the buyer nor the seller had any realistic possibility of walking away, no matter how poor the deal in prospect may be for their respective organisations. Carl was emphatic about this. This is because on the one hand, the seller has only a limited range of products or services to sell, and he has to overcome whatever obstacles the buying organisation may put in his way to try to achieve a sale regardless of the circumstances and the profitability of the deal that can be done. For a salesman to walk away, the deal has to be a really bad deal. This often means a bad deal for the salesman personally, rather than for his organisation. The buyer, on the other hand, can walk away from one seller to another, but has a requirement to fulfil on behalf of his organisation, so he has to buy it from one source or another. Ben said that often a negotiator’s BATNA changes through the life of a negotiation:
“It’s very important to re-assess what that BATNA is on a continuing basis, and update it. And it will be updated through two different things: - it’ll be updated through a growing appreciation of the issue at hand and the facts surrounding it, which will help you make an informed decision, - and the second thing is that it will be affected by the individual’s interpretation of where the leverages and where the behaviours are in the negotiation.”
Carl said:
“. . . I have never seen us walk away from a bad deal, that I can think of. . .
. . . I’ve seen people wrap themselves inside out and end up walking away with something that they know that stinks and they’re trying to justify it, but I’ve never seen anyone say no, we can’t do it.”
Christine said:
“Findings relating to the BATNA were mixed. However, its frequency of use as a real alternative appears in question . . . and I mean, we have somebody there that takes notes and just watches, and takes notes of how the other party react”.
Ivor said:
“There is always an alternative - how often is that real, it depends on how good the negotiator is, and how well they’ve prepared, and the situation they’re in.”
There were some clear findings emerging from the responses to the two questions about the BATNA:
• A BATNA is an artificially created negotiation position, not a real alternative to a negotiated agreement.
• In extreme circumstances (for example, where a supplier has suddenly turned extremely hostile) it may be necessary to create a BATNA as a strategy to allow further options other than the undesirable likely outcome currently envisaged. This was not a Best Alternative to Negotiated Agreement (BATNA) but simply an Alternative to Negotiated Agreement (ATNA).
6. Use and abuse of power - the "fait accompli" / hiding behind policy or rules
Mike recalled a customer, a large power-dominant financial organisation taking an extreme negotiating position:
“Their stance is that they will not accept any uncapped indemnities at all, even if it is standard market practice to do so (e.g. for third party IPR or data protection breaches). It is a matter of policy. They will not allow any exceptions. It is not negotiable, to any organisation.”
The only organisations that have negotiated this away, have been prepared to take a stand and risk losing the business, but it has happened on one or two occasions. This would appear to be abuse of the power of a large organisation.
3. Theme 3: Interpersonal ‘chemistry’
From the interviews emerged several areas which could be described as personal characteristics, but which exhibited themselves as behaviours, which are currently grouped together and collectively known as emotional intelligence. These elements recurred throughout the interviews as actors kept returning to issues around emotional intelligence which had significantly influenced their major negotiations. The issues circled around whether the negotiators held each other in respect or contempt, liked or disliked each other, trusted or distrusted each other, and whether the behaviours they saw demonstrated integrity, fairness or charisma. One of the factors which could influence the perception of these elements was the self-confidence of the negotiators. Several actors constantly repeated that it was these interpersonal ‘chemistry’ issues that dominated the outcome in many major negotiations, and left lasting impressions on the negotiators. According to them, the traditional influences on negotiation success, such as preparation and planning, or choice of persuasion techniques employed, were of less importance than the relationships that occurred between negotiators around these elements. These begin with the importance of establishing a rapport.
1. Research the negotiator(s) on the other party’s team
Barbara said:
“I think you’ve got to understand people, and the most important part of the negotiation is researching who you’re going to be negotiating with. And I do. - But I never start a negotiation off by starting the negotiation. - I always start off by having a bit of a chit-chat.”
She went on to say:
“You must know who you are negotiating with.
. . . if you don’t look at who you are actually negotiating with, you’ve lost, because I guarantee, if they’re good on the other side, they’ll have done it about you.”
2. Disrespect or dislike for their opponent
There was consensus amongst the buying negotiators that respect and personal liking for their negotiating opponents makes their task easier, while disrespect and dislike make the negotiation more difficult and de-motivate them. This may only make the negotiation more difficult, as Eric said:
“One of the most difficult things in buying or negotiating is working with somebody you don’t like and you don’t like their style or manner.”
However, it may bring about a resistance to negotiate which will ultimately lead to an adverse result, as stated by Ben:
“. . . it doesn’t matter what you say - you could be correct - if somebody takes a personal dislike to you because of the way that you’re negotiating with them, and if you’re not treating them with adequate respect, or you’re not listening to them, or you’re simply trying to force your opinion on to them, then often you get an adverse result because the shutters come down and the person just says ‘it doesn’t really matter whether you’re right or wrong, I’m going to resist this on principle’.”
Ivor confirmed this and was clear that he would get a better deal with someone he liked and respected:
“I tend to think you give a better deal at the end of the day to someone you like and respect and have a bit of bonding with, than someone you think is an idiot, or something worse.”
3. Q 6 “Can the interpersonal behaviours involved in a negotiation be separated from the subject matter being negotiated?”
This question arose from Ivor, one of the most experienced negotiators, a past president and Fellow of CIPS, who made the comment:
“Can I introduce an interesting concept here? It’s just coming to me as I’m thinking . . . we use these words adversarial and collaborative and so on, but just thinking about my experience, I’d almost separate the content and style of the negotiation from the personal relationship because I can think of times when the content and style of the negotiation has been what you’d probably define as collaborative . . . but actually the style, just because the personal relationship wasn’t good, or you didn’t like the person, or maybe it was just very different styles, has felt quite adversarial.”
The concept had arisen earlier with David but had not been identified as a separate point at that time:
“Often there is a very good personal relationship between the two parties, and that often serves to benefit the supplier over the customer because, when the supplier is not performing, or is reluctant to do something, then they revert to sort of an emotional appeal to the customer that, because everybody is great friends, we don’t need to pin this issue down in the negotiation because we’ll sort it all out later.”
Denise identified the opposite of these good interpersonal relationships:
“I think you can have a clash of testosterone sometimes, and actually the purpose becomes irrelevant and it’s just the battle that’s important. And I see that in members of my team sometimes. And I have to say, you can lose the battle to win the war, all those clichés. - Actually, it’s the bigger person that puts it in perspective. . . if you get professional negotiators negotiating against each other, the purpose of the negotiation, in extreme circumstances, can be forgotten.”
1. Vulnerability of a negotiator susceptible to being seen to be reasonable
Mike said:
“Once a negotiator has revealed that he prefers to be perceived as logical or reasonable, you can make a lot of headway by appealing to that natural instinct (and it's an instinct that most people have to some extent). By constant repeating of the logical argument and claiming how unreasonable the other party's position is, the negotiator with a conscience will often eventually concede.”
4. Selling negotiators’ personal motivations
Two actors had identified personal motivations of sales negotiators that had far reaching consequences. Eric identified that one of his potential suppliers was looking to get a foothold in Scotland:
“. . . one of my buyers . . . cleverly learned, . . . a certain business was trying to move into Scotland and we were already working very well with their competitor who had a base in Scotland . . . so that understanding, that piece of emotion, helped him in his preparation, conditioned both parties that he was going to use it. And he did, and we got a massive benefit cost-wise, out of all proportion to the real cost of the article, because he had one defending their territory and the other one wanting to come into the territory, and almost in those cases the money is not the object, it’s the target for them of getting a foothold, and the other is resisting that foothold by our competitors . . . had he not brought the new entrant into the thing, we would never have got the commercial benefit we got out of that.”
Ivor had learned how a salesman was rewarded while negotiating a particular deal. He said:
“I discovered actually when I was at [XY Bank], I got this amazing deal from one of the consulting houses - basically I got £200,000 of free consulting on e-procurement, and it was because I realised - I don’t think it was me being particularly smart, I think he more or less told me - but the partner, his target that year was just to get in and get a project with [XY Bank] procurement as a sort of beachhead to them trying to sell us much bigger e-procurement solutions and stuff - I mean he was willing to really give the first project away as long as he just had on his sheet ‘I’m doing work with [XY Bank] Procurement’, and of course once you realise that you can get £200K’s worth of free consulting.”
This revealed that the sales negotiator was targeted solely with getting a project established with the Ivor’s employer. There were no revenue or profit related targets associated with it. David identified that a significant amount of effort had been invested by his global sales organisation in a competitive process but that the award of the global contract that followed (in the event that they had been awarded it) would neither have resulted in any new business in any particular country for his organisation, nor any commission for him personally. The scramble for business in each and every country that followed the global process would result in the award of a local contract in that country and each local country salesman was free to enter that competition and win sales commission.
Following this revelation, all of the transcribed interviews were analysed for mention of the personal motivations of sales negotiators. The following examples were identified:
• Inducements to sign a new customer but no specific target revenue or profit, and a budget to give free services as an inducement for further business.
• Inducements to sign a global contract, even though this was a framework agreement with no revenue directly linked to it, and individual contracts would be open to competition separately in each country.
• Inducements paid in each country to local sales personnel, regardless of global or regional contracts.
• Widely varying commission and bonus schemes for differing elements within an overall contract.
• Widely differing payment terms dictating when commission and bonus schemes become payable. The more sophisticated organisations not only delayed payments until they had delivered and invoiced the sale, but until payment had been received from the customer, to avoid the salesperson having been remunerated against an unpaid invoice or a bad debt.
• Within these varying commission and bonus schemes there were different rates for one-off sales compared to sales resulting in Recurring Monthly Revenues (RMRs). The more sophisticated of these schemes paid commission based upon a percentage of gross profit that varied depending on the gross profit achieved – the higher the profit realised, the higher the percentage of commission would be paid.
The key to the benefit which the buying negotiator may be able to negotiate is to understand those areas where the seller can give concessions without incurring any personal disadvantage. All of the sales negotiators interviewed had mentioned that they sometimes found themselves in the ambiguous position of being the sole representative of their customer/potential customer within their organisation, being challenged to justify the position of their negotiating opponent within their own organisation. This clearly created a dilemma for the sales negotiator, which placed pressure on them to act in good faith on behalf of their opponent. In these circumstances, it was the individuals who had established at the least a rapport and, at best, a relationship over an extended period of time that would fare best.
5. Ethics, Trust and Integrity
1. Q 7 “In your view how important is personal integrity in negotiations?”
This was one question for which the answers given were unanimous. All respondents considered personal integrity and trust to be of paramount importance and were at pains to emphasise that they have personal integrity themselves. Denise was typical, with the following response:
“Yes. I think that’s [personal integrity] really important. I don’t think lying and cheating, and ducking and diving in a professional environment does you any good at all.”
However, when this was probed in slightly more depth, a different slant was revealed:
“. . . No, no, I didn’t give the whole story, the whole picture, which is not the same. I don’t tell them anything that’s not true, I just may not tell them all of the toys that I’ve got in my cupboard - which is just basic negotiation.”
This led to the next question:
2. Q 7a “Do you ever deliberately deceive your opponent in negotiations?”
(The words ‘lies’ and ‘lying’ were specifically excluded from this question initially).
The responses to this question exposed an area of ambiguity around the integrity of buyers in negotiations. All of the actors were swift to state in strong terms their integrity, often stating they would not tell lies in negotiations. However, when asked if they would mislead the other party, or correct the other party’s misunderstandings, or correct their mistaken assumptions, they unanimously agreed that they would not correct them, but would mislead them, (or allow them to mislead themselves). When asked if they would tell a seller that their price was not competitive even if it was the lowest price, all of the buyers agreed they would. Therefore, it is clear that although all actors regard themselves as being people of integrity, they have clear ideas of what this requires them to do and how this differs from what is allowable in normal commercial practice.
One actor, Ivor, recognised this ambivalence or cognitive dissonance displayed by negotiators who, he believed, had clearly partitioned in their own minds ‘lying’, which they would not do, and deceiving their opponent, which they were comfortable to do:
“If you are dealing with someone who is deliberately disingenuous, then you have to ask precisely the right questions to find out what you want to know. Otherwise they will be able to answer your questions truthfully, but still deceive you. The skill is uncovering that this is how the negotiator thinks. And then asking the right questions.”
The breakdown of trust in relationships is critical in preventing business continuing on an ongoing basis. Carl said:
“You’re working with a supplier with whom the relationship has totally broken down, you distrust each other, you dislike each other, you don’t want to take their calls - you know, it’s just so time consuming - everything has to be put in writing, no one will move until they’ve got a purchase order, no one will do a jot more than it actually says in the contract - business can’t function like that, if there’s been such a breakdown of trust.”
3. Q 8 Have you experience of 'golf course' deals being made outside the normal organisational framework?
Several senior negotiators had experienced ‘golf course deals’ that had been concluded between senior stakeholders from both parties whom, having shaken hands on a ‘Heads of Agreement’ or a ‘Letter of Intent’, then required procurement to step in to document the deal in a formal contract. Ben said:
“Broadly, ‘golf course deals’ favour suppliers and they’re a deliberate tactic in order to isolate the negotiation teams. My experience of them is that a supplier wins a competitive tender by returning a wholly compliant term sheet that it knows it can’t live with, fully in the knowledge that, once it’s won the work, the frictional cost of changing that supplier half way through the tender process means that the customer will effectively always deal with the supplier . . . - it’s a highly disingenuous mechanism, but it goes on and it’s rampant. It goes on all of the time.”
Ivor had an equally bad experience of the practice:
“In my worst ever negotiating experience . . . I said to the partner, “I need to meet you and talk about it”, so got him in the meeting room, and I started doing my spiel about I wasn’t very happy with the rates, and all the rest, and I think he was younger than me which annoyed me as well, and he sort of looked at me and he said, ‘you have to realise, we’ve done this deal with Patrick, (who was the chief executive guy just then) - it’s a done deal, we’re starting tomorrow’.”
4. Deliberate deception
David identified a practice he had observed, of negotiators agreeing to concede a point that they had no intention of conceding in the contract, in the hope that it would be forgotten before being incorporated into the contract. This practice relies on the other party not keeping meticulous notes and one’s own party controlling the draft updates. Therefore, it is more difficult to get away with this if the draft is controlled by the other party, or when larger negotiation teams are employed, as there will be observers/note-takers ensuring that every concession is documented and carried forward into the contract. He had even witnessed the situation when Microsoft Word versions of a contract were being exchanged with ‘Track Changes’ highlighting supposedly all changes made by the other party, where controversial points already conceded had been removed with ‘Track Changes’ switched off. When this practice had been uncovered by the actor, he changed his organisation’s processes to ensure that every version of a contract received in Word is now compared to the previous known version using the ‘compare documents’ function in Word in order to verify it. Furthermore, David’s firm now insists on controlling the drafting process in almost all negotiations.
6. Theme 4: Persuasion Techniques
Although power and the use of coercion are usually grouped together with the other persuasion techniques, it has here been treated separately, as a major theme and one of the research questions of this thesis.
1. “What persuasion techniques exist in negotiations?”
The responses to this question included a wide variety of points.
All actors replied to the question with different ideas on important persuasion techniques, but 14 actors replied with a number of criteria that are not normally regarded as persuasion techniques. Upon analysis, these 48 techniques could be summarised and consolidated into the twelve techniques in Figure 4.4. This summary comprises of the traditional five persuasion techniques plus the sixth ‘lost persuasion technique’ of understanding the other party’s motivation from Berrien et al. (1944) and a further six persuasion techniques: relationship building (sometimes stated as establishing rapport), rejection, adversarial short term view (this was described as taking an adversarial stance and fighting hard to win this particular negotiation with no regard to the future relationship with the other party), credibility, deceit and neuro-linguistic programming (NLP).
Figure 4.4: Preferred persuasion techniques
[pic]
Of the main five persuasion techniques that are taught on CIPS courses (logical persuasion, bargaining, threats (the use of power and coercion), emotion and compromise), most actors identified with one or two, and when all five were revealed after they had responded, had various things to say about the techniques they had not mentioned, often stating why they would not use them.
Do you use the following techniques:
7. i Logical persuasion
In total, 15 out of 20 actors mentioned logical persuasion as a negotiation technique they favour.
Of the five persuasion techniques which are ‘logical persuasion’, ‘bargaining’, ‘coercion’, ‘emotion’, and ‘compromise’, the findings from the field research indicate that logical persuasion is more likely to be favoured than the other techniques in the ratio of 4:1. Of the 15 that favoured logical persuasion, six claimed that this was their primary negotiation technique above all others, and were reluctant to be shifted from it, even when it was clear that it was not having the desired effect on the other party.
Those negotiators that favoured logical persuasion supported their views as follows:
Carl:
“. . . logical persuasion has to work, to a certain extent. Otherwise there’s no point in talking to each other. When I’m telling a customer that the product’s got 30% almonds in - everyone knows almond is a very expensive nut, you’ve got to import it from California - we used to use Californian almonds - as an example, so it’s logical that makes the product more expensive, and if they don’t want to pay for it we take some almonds out. That is logical.”
David:
“. . . even if you are able to argue your case in an entirely logical fashion, it doesn’t mean that the other side is willing to accept your position.”
Only one actor, Harry, said that logical persuasion is a technique that he definitely does not use. However, he seemed unclear about what logical persuasion is, and seemed to be under the impression that it was ‘debating about what scope of services (the supplier) are proposing to provide’. This was clearly a perception problem with this one actor.
1. Accepting the logical argument, but refusal to change position
Some actors identified a gap between the acceptance of the logic of another negotiator’s argument, and agreement to change one’s position as a consequence, particularly when it would be to their disadvantage.
Norman said:
“I’ve had occasional encounters with hard-nosed negotiators, who can accept the logic of an argument but will still refuse to change their position, not caring that their stance is illogical, and that they are perceived as illogical and unreasonable.”
2. The power of persisting with logical argument
Ben said:
“even in situations where the balance of power is such that the person being persuaded really doesn't have to accept the position being put forward by the other party (if for example, it is strongly believed that the other party will not walk away), if the argument is put forward logically and persistently enough, most people in that position of power find it hard to resist the logic, and end up accepting the position even if they probably could get away insisting on what they actually want.”
8. ii Bargaining
It was at the researcher’s presentation of initial findings to Huthwaite at Wentworth, Yorkshire, on 4th September 2009, that two significant points were made about the importance of bargaining, and its apparent absence from the CIPS syllabus on negotiation. The first point was that, of all the negotiation techniques available, it is bargaining that is the core negotiation activity around which all others should be centred. Bargaining is negotiation, and negotiation is bargaining. The second and more important point was that all statements in the bargaining context must be predicated on the word ‘if’. The key to bargaining is the concept of exchange. So, the offer goes, “If I do xyz, will you do abc?” or alternatively phrased, “If you do abc, then I will do xyz”. The key point about these offers is that they are conditional. Without the offer of exchange, then it is not bargaining, but merely discussion. The importance of the conditional ‘If . . . . then’ statement could not be over emphasised. I am most grateful to Ian Newall of Huthwaite for this insight.
By the date of the presentation to Huthwaite, all except one of the research interviews had taken place. Given the above, it is interesting to note that only four out of 20 actors had mentioned bargaining as a negotiation technique they favoured. Barbara stated she had never used bargaining in a negotiation. In contrast, Denise said:
“You don’t get anything for nothing. So you’ve got to give to get.”
The researcher concluded that the importance of bargaining as a technique is widely underestimated.
9. iii Use of power and coercion – see separate section 4.2.2 Theme 2
10. iv Emotion
Overall, 12 out of 20 mentioned emotion as a negotiation technique they did not favour. It became clear from the ensuing conversation that nine of these actors did not regard the use of emotion as a valid negotiation technique, rather an emotional plea to the other party, which they believed was unprofessional. This was an unexpected perspective for the researcher, as emotion has been taught as one of the valid five traditional persuasion techniques. Eight of the actors mentioned the use of emotion as just one of the tools in their kit, and were comfortable using it.
11. v Compromise
Nine out of 20 mentioned compromise as a negotiation technique they were aware of but did not favour themselves. It became clear from the ensuing conversation that six of these actors regarded the use of compromise as a weak negotiation technique, with strong negative overtones.
Barbara stated:
“I don’t think of it as being a persuasion technique, I think of it as giving in.”
However, one single actor, Oliver, had a very different perspective on compromise. He noted:
“Compromise is a noble endeavour. Compromise is about different parties getting together and understanding how to work together. It can apply to different cultures, it can apply to matters of State … You know, compromise in many instances is the only way things get done. So you know, to me, there’s absolutely nothing wrong with compromise if it’s a means to an end and if ultimately at the end of the day both parties benefit. Both parties should benefit. How can people stay in business if…?”
“Certainly I’ve never done a deal where some element of compromise wasn’t present – not ever – because I’ve never ever done something where I got absolutely everything I ever wanted. That simply doesn’t happen.”
12. vi Understanding the other party’s goals and objectives
The actors who use this technique described with enthusiasm how they had found the key to a successful negotiation outcome emerged as soon as they understood the underlying motives of the other party with whom they were negotiating.
Oliver explained that his preferred negotiation technique is to discover exactly what the other party’s genuine objectives are. He said this technique has been the secret of his considerable success in negotiations throughout his career. He starts out by building a strong rapport with his opponent and, during the course of establishing a cordial relationship, listens carefully so as to understand the opponent’s primary goals relating to the matter of the negotiation and any perceived obstacles to meeting those goals. He then seeks to obtain what he requires from the negotiation while at the same time, delivering their goal. An overlay of fairness, flexibility and firmness adds to his success. Oliver was not the only negotiator to adopt this technique as his mantra in negotiation. Mike uses this technique and stated that, in his view, a good negotiator is:
“Someone who is able to empathise with the other side. So, someone who is able to stand in his opponent’s shoes. For me, that’s the overriding characteristic.
I think if you start off with an understanding of what the other side is trying to achieve, then it informs you and makes you a better negotiator for your own side.
You can’t come at it in a vacuum - you need to understand what their motivators are, what their parameters are.”
Eric said that it was important to put yourself in the shoes of the other party:
“If I was in their shoes now what would I be feeling, how would I be going through this, what do they need out of you, what could I give them?”
That three of the most experienced negotiators approached negotiations intending to gain an understanding of the underlying motives of the other party, and used this as a key to finding a mutually acceptable outcome, was evidence that this is in use as a valuable technique in buyer-seller negotiations currently.
13. vii Promises
A new technique which emerged from the interviews is the ‘promise of future business’. This was first mentioned by Carl, who said:
“If I was trying to persuade a supplier to do something that he really didn’t want to do, and the only thing I had to offer, the only carrot in my bag was the promise of future business, then yes, I may well inflate the …, you know, I’d give as good a spin as possible to that.”
Ivor mentioned this as ‘promises of future benefits’. He was aware of this as a technique but he refused to use it himself, believing it would store up future problems:
“What I wouldn’t say to a supplier, and I don’t think I’ve ever done this, is the sort of false promises thing where you say, ‘well if you do this for me at his price, I’ll give you a £1million order next month’, knowing you’ve got no intention of doing it.”
It was clear that promises made during negotiations could be either explicit or implicit, and were meant to be instrumental in influencing the other party to whom the promise was made, to reach agreement. This would take place as part of the bargaining phase, and may be recorded in the contract subsequently signed between the parties, but most likely would not be part of the formal deal.
Several actors mentioned this technique, and it is considered worthy of being added to the established persuasion techniques. The technique of making promises may be seen by some as the converse of the established technique of threat, the use of power and coercion, because rather than making an explicit threat, a promise may be the more acceptable alternative side of the same proposition. Although the technique is closely linked to bargaining, compromise and use of emotion, after consideration the researcher decided it should be identified as a separate new technique.
14. Theoretical techniques
Actors were asked whether they used Porter’s ‘Five Forces’ or Kraljic’s ‘Portfolio Matrix’ or similar approaches that featured in the literature review. The unanimous response was that not one of them used these approaches.
22. Other findings from interviews
Several new perspectives were identified from the interviews. Some of these perspectives were not responses to specific questions because they were outside of the scope of the research questions and they emerged unprompted from the semi-structured questions and the deliberate practice of allowing the actors to digress into other topics, and then pursuing these new ideas, as part of the theoretical sampling methodology. They are recorded here for readers because they are believed to be of interest to researchers into the subject of negotiations between buyers and sellers in the B2B context.
1. Effective Negotiators
All of the actors gave responses to the question “What makes an effective negotiator?” in their own words. These responses were then correlated to the terms used in research first conducted in the 1960s by Karrass (1968), where the meanings were synonymous. These are shown in Figure 4.5. Some of the characteristics described by the actors are new, there being no equivalent in Figure 4.6. These are vigilance, understanding of stakeholder’s requirements, ability to recognise opponent’s style and mirror it, numeracy, ability to flex their neural pathways, and an astute business person. Samples from the responses include, in the words of the actors themselves, describing what a good negotiator is:
Eric said:
“A good listener, and a good planner, someone who thinks ahead and has the ability to plan and plot and have various scenarios in their head. Thoughtful, alert, ability to think on your feet, ability not to panic - that usually comes from preparation and understanding, homework and so on.”
Alice said:
“. . . a natural instinct, raw capability, appetite for a deal and all that stuff and then I think it’s a mixture of some of the hard skills and some of the soft skills, some technical knowledge, knowing the right negotiation framework. But also there’s the art of the negotiation.”
Graham said:
“Somebody who listens well, who can evaluate information, can communicate well, and can work towards a joint solution.”
On the BATNA Graham said:
“I think a good negotiator will work hard to establish one, i.e. an alternative supplier, an alternative product, an alternative whatever - a plan B, and the stronger the plan B, is the more it puts power in the buyer’s hands, I guess, and makes the negotiation stronger.”
Ivor said:
“Somebody who’s very determined. Somebody who is very focussed on the outcome they are looking for. Somebody who is a good listener - you need to be able to hear as well as speak. I think someone who’s got good human skills. They talk about that blend between warm and cold: to be able to be very hard about the subject but also be able to warm with the person.
Figure 4.5: Perceived characteristics of effective negotiators – interview responses
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2. Female negotiators
The first actor to raise the topic of female negotiators possessing power over their male counterparts, was male actor Harry, who raised the topic in response to a question about whether he used emotion in negotiations. He said that he used female negotiators as his ‘secret weapon’, and went on to say:
“I think women are slightly harder to negotiate with. I think it’s because they’re women . . . I’ve got two procurement managers who are female. I’d bring one of them in to sit alongside me, or I let them chair it - and it’s distracting in some cases, especially if it’s an all male team on the other side, they’re more liable to comply to what the woman says.”
The subject of female negotiators was raised in subsequent interviews, numbers 10 to 20.
The next actor was Ivor, and he agreed that female negotiators held a greater power over him than their male counterparts:
“ . . . I think sometimes I didn’t push quite as hard with a couple of my female salespeople - . . . there was a little bit of ‘well, I won’t go for that last couple of percent’, which I think with a bloke, even if it had been a bloke I had a good relationship with, I might have pushed just that bit harder.”
Christine, a senior female procurement director, agreed that female negotiators are at an advantage over male negotiators. She said:
“I don’t think that a man sometimes feels that he’s losing face when he gives in to a woman as much as he would if it was a man.”
Elizabeth, a senior female procurement director operating in a predominantly male-dominated industry, construction, agreed that being female gave her a particular advantage, saying:
“. . . the suppliers, they’re only used to dealing with men. --So in negotiations it’s actually quite easy because they’re so unused to my style. - I think it just scares them rigid most of the time because they just don’t know what’s coming - because men negotiate in such a different way, and it’s always a bit testosterone fuelled with me, in the negotiations it’s beating chests type of men - with women, we don’t do that, we’re much more disarming.”
She also admitted to using a certain female guile:
“. . . being a female, I build relationships in a better way, so it means that I can call in favours.”
The consensus from the sample following the revelation in interview 9 was that female negotiators are at an advantage when negotiating with male counterparts, and this was confirmed as the consensus of the actors in the sample, although only four of them were female.
3. Deadlines, fatigue and exhaustion
Four actors who had experience of acquisitions and merger negotiations identified that the imposition of deadlines (real or artificially created) on the other party, and the consequent fatigue and sometimes exhaustion, often caused by sleep deprivation, had a detrimental effect on the quality of decision-making of negotiators. This had been used against them as a deliberate tactic in order to try to force a negotiation team to make major concessions against their better judgment, because their judgment was temporarily impaired.
Ben said:
“In situations where the timelines are often ridiculously tight, very often on corporate or mergers and acquisitions transactions, where they get agreed very late at night because people are so tired and under pressure to meet a deadline . . . they concede on points that they would otherwise probably not concede”
Norman said:
“I think for that one individual, I would have to say (that that was their normal way of doing business,) yes. But we were equally determined that those tactics wouldn’t work, and we were equally determined be it cold or hungry that that wouldn’t affect us, or tired, but we would just see it through.”
4. Contracts
1. Q 9 “How important is the written contract when agreement has been reached?”
There was almost unanimous agreement on the importance of written contracts, 19 actors out of 20 claiming that they are very important. Reasons given for the importance included:
“An important mechanism for managing relationships”
Ben
All except one of the actors had never heard of large organisations doing business without written contracts. It was, therefore, concluded that this practice was peculiar to supermarkets, when buying goods for resale from small suppliers, where it had been identified. According to the actor, it was common to all of the UK supermarkets in the period of seventeen years up to 2002 but the practice was not found in any other field in the study.
2. Q 10 “How common is it for major deals not to be documented in formal contracts?”
Adam had informed the interviewer in the initial interview that in seventeen years supplying biscuits and cookies to supermarkets he had never had a written contract. He believed that this was because the supermarkets wanted flexibility of supply themselves, but none for their small suppliers.
Frank had a different perspective on simple contracts:
“Yes. A bit like if you go into the London Fuel Exchange, and they actually sell tankers of oil on little bits of paper. - There is no 50-page contract that goes with it, but that piece of paper is a contract. But, there will be some trading rules around what that means - and what’s interesting in that environment is that those rules tend to be quite generic not adversarial, if you see what I mean.”
3. Q 11 “Is it true that the contract is only important when things go wrong?”
(Deliberate closed question)
Sixteen of the 20 actors concurred with this statement, but most went on to cite examples of contracts being necessary for clarity around deals done prior to their taking up their responsibilities.
Ben, a lawyer, put forward his overview of the importance of contracts:
“I think that there is a fundamental purpose to a written contract, which stretches back to the Magna Carta a thousand years ago, where everybody recognises the fact that you have to reach an agreement, carve out the things that are not written down, and it’s impossible to establish in many ways what’s been agreed between parties unless you can do that. So I think it’s a very important mechanism for managing relationships.”
4. The ‘Sweeper clause’
Some sellers, particularly in large outsource contracts, rely on being able to supplement the original contract price with ‘change control’ charges, which may move the contract from negative profit to positive. Several buying negotiators made the point that they believe that suppliers will put forward a compliant bid during a competitive process knowing they will not agree to the same terms when it comes to signing the contract, just to get shortlisted. Buyers spend a lot of time countering this risk by specifying in minute detail exactly what the supplier is contracted to do. This is often not the optimal way to deal with the problem, as an alternative is to insert a ‘sweeper clause’, putting the obligation on the supplier to deliver the full end-to-end service inclusive of everything necessary to deliver it, whether specified in detail in the contract or not.
Some actors, like Ken, believe they will even sign an unprofitable contract, relying on chargeable change controls after contract signature, in order to bring the contract into profitability:
“It was broadly an unmanageable contract. And you’d got a supplier who was set a task that was impossible to deliver on; - they wanted to win the business so, like all suppliers in my view, they think they can get away with slippage of the scope.”
The ‘sweeper clause’ is a ‘catch-all’ clause which has the effect of ‘sweeping up’ all ambiguity which the seller might rely upon in order to invoke chargeable Change Controls. (This is a well-known ploy where a seller may agree to take a contract that is either low or even negative margin business, relying on turning the contract to profitability by pushing through several chargeable Change Controls and effectively holding the buyer to ransom). The ‘sweeper clause’ effectively puts the responsibility for delivering the expertise around the area of service provision, such that the seller knows or should know all about the elements of the service they provide, and they cannot abdicate their responsibility . It comprises of two elements. Firstly, anything incidental to the primary service being provided is included with it and may not be charged for as an extra to the price of the primary service. Secondly, the buyer is relying on the seller for its expertise. If elements of the service have been omitted from the contract due to the buyer’s lack of knowledge then the seller is obliged to provide any and all such elements that would have been identified in a discovery phase then it must be ‘swept up’ and included as part of the contracted service.
5. ‘Purposive contracts’
Mike mentioned a fashion in Information Systems (IS) contracts around the millennium (year 2000) for what were known as ‘purposive’ contracts. He described them as follows:
“At the time exponents of these contracts claimed that it was unnecessary to specify their requirements in detail; all that was required was a high level service description, and the supplier would provide the service accordingly. This had the effect of shifting the workload involved in specifying the service to the post-contract phase.”
6. Minimise Legal involvement
Ben, a partner in a major London law firm specialising in negotiating IT and outsourcing contracts recommended:
“Lawyers should be involved at the outset, and again at the end, but they don’t need to be involved through the whole negotiation process. If you are taking a standard offering from the supplier then you have little choice but to use their paperwork. However, if it’s a bespoke service, insist on your own. Get your legal advisor to spot the top ten or fifteen issues, both legal commercial points. Then go and negotiate the commercial deal. When that is done go back to the lawyers for a final ‘red flag’ review of the contract. That’s the most efficient way of maximising your legal protection while minimising your legal costs.”
7. Unwritten contracts
Large supermarkets deliberately did not agree formal written contracts with smaller suppliers of goods for resale, enabling them to drop suppliers at a moment’s notice. Commitments made to these small suppliers might be documented in letters or e-mails, but were not formalised in contracts.
5. Major Outsource Contracts
1. First year
The first year of an outsource contract will usually be difficult and will fail to deliver as anticipated, according to actor 16.
2. Failure to manage
It is common for large organisations to outsource processes and fail to put in place any in-house provision for management of the outsourced contract, according to actor 16.
6. Lack of negotiation expertise and experience
James had been surprised at the lack of expertise of senior individuals in his organisation:
“What I quite often find is that the firm has lots of quite senior executives that are utterly superb at understanding their client’s business, or utterly superb at delivering a project, or an operation, or a service of some description. But when it comes down to basic negotiating with a third party – hopeless. They’ve just never done it before and it’s not their fault that they’re hopeless, they just haven’t had the experience.”
7. Global database of third party suppliers
James referred to a database that has been established in his global organisation which has quickly proven its value by enabling savings of over 30% on one multi £million deal alone. This is done by giving negotiators access to vital information about all interactions globally between their organisation and every seller, both successful and unsuccessful, between the organisation and all its technology suppliers and potential suppliers. Only three actors have operated at this level globally, though all three concurred with the benefits of such a database.
8. Dealing with major issues
Barbara had learned to her cost that it is unwise to leave big issues unresolved until later into the negotiation process. On reflection she believed that these issues could have been resolved in the earlier stages of the negotiation and failure to do so demonstrated to the other negotiating team a lack of resolve, or a weakness, that was repeatedly used against them each time the issues were addressed. This difficulty was exacerbated by the linkage of several major issues by their opponent, which created a chain of dependencies, none of which had been resolved.
9. Linkage of issues
Barbara had also encountered a problem caused by the linkage of separate issues, some related and others unrelated, by an opponent in a major negotiation, which, on reflection, should not have been allowed. By allowing the seller to link certain issues they had in effect sanctioned a delaying tactic which was then used against them to drag out the negotiation, and increase leverage against them. These linked issues then became more difficult to resolve, primarily because they were linked together. The lesson for this actor was that they should never have agreed to the issues being linked, but should have resolved each issue in turn.
10. Fear of retaliation
Ivor, a sales negotiator, revealed that a strong reason for not taking advantage of his opposite number in negotiations, was fear of retaliation by a valued trading partner. He articulated this by saying:
“A lot of what we do is because we do have a long term relationship with outsource vendors, and you are always looking at a bigger picture of what you do, and if there is a feeling that you’ve really done them over on something then that’s going to come back in the next set of negotiations.”
11. Feigned stupidity and persistence
Barbara contributed a technique which had proven successful on many occasions: feigning stupidity by digging in your heels and keeping saying ‘no’. The feigned stupidity ploy allows the negotiator to keep asking the same question over again, each time eliciting more information, which assists in building a more credible defence. Alternatively, the other party may just become so fatigued that they lose the will to continue negotiating.
12. Culture of the organisation or sector
The negotiation approaches adopted by organisations and sectors are often dependent upon the culture of that organisation or sector. Actors who worked in the construction and supermarket sectors described them as being particularly brutal.
Harry believes that the negotiations he participates in nowadays are more sophisticated than in his previous jobs, and in particular, compared to when he was working in the construction industry, where the culture was brutal and negotiations were crude power plays. He said:
“Keep calm. Keep your powder dry. I can defuse situations, those banging of the tables of years ago. - Nowadays, my negotiations with people are a lot more civilised, they can afford to be. . .”
13. Language obfuscation
The question regarding integrative and distributive approaches to negotiation revealed that the interview actors were not impressed by the practice of inventing and using new words and expressions by academics. Obfuscation is the concealment of intended meaning in communication, making communication confusing, intentionally ambiguous, and more difficult to interpret.
1. Lower level of reporting
Where important or critical business processes are outsourced, the new managers of these processes in the outsource provider will report into the buyer organisation at a lower level than the in-house manager previously reported, demonstrating the arms-length nature of most outsource contracts, according to actor 15.
14. Negotiation Team Structure
The research found that those negotiators involved in very large negotiations had evolved similar structures for managing large negotiating teams by separating the functions necessary to manage the way in which the negotiations were conducted, including the vital roles of the Governance Team, the Negotiation Team and the Support Team.
15. Reviewing lessons learned
Most buying negotiators confirmed that the final phase of reviewing how the negotiation went and the lessons learned very rarely happens in practice whereas, conversely, most sales organisations almost always conduct such reviews because it has a direct input into improving their sales processes and future sales performance. Buying negotiators were all too often sucked in to operationalisation of the contract as soon as it was agreed.
16. Negotiation, a ‘seat of the pants’ activity, unplanned and disowned even in the most respected leading global companies
Even in the most respected leading global companies negotiation tends not to be a formally planned activity and ownership of negotiation as a critical business function tends not to be held or controlled centrally, but delegated randomly across the organisation. This finding was clear from the negotiators interviewed and was confirmed strongly by Huthwaite in their research (Kawamoto et al., 2009).
23. Phase 2 – Findings from questionnaires
1. Questionnaire 1 - Perception of the importance of effective negotiator characteristics
The ranking of the order of importance of characteristics of effective negotiators shown by the actors in this study in Questionnaire 1 (see Figure 4.6) is not generally applicable beyond the sample of actors within this study. The ranking was obtained by sorting in an Excel spreadsheet the characteristics scored by the actors from highest to lowest in importance as ranked by the sample.
Subsequently a second ranked listing was produced (see Figure 4.7), which combines the results from the interview responses with the results from the questionnaire responses. It will immediately be apparent that there are several characteristics identified in the interviews that were not included in the questionnaire. Otherwise there is a fairly strong correlation between the results of the two responses.
What is interesting about this ranking is the scattering of personal ‘chemistry’ elements in the top 23, with listening skills, personal confidence, integrity and understanding of the other party’s needs and interests all in the top 10, followed by emotional intelligence and self-control in the top half of the list. Equally interesting is that ‘attractive personality’ is so low in the list, and that ‘respected by the other party’ and open-mindedness and tolerance’ are in the lower half.
Figure 4.6: Characteristics of effective negotiators – questionnaire responses
[pic]
Figure 4.7: Characteristics of effective negotiators – interview and questionnaire responses compared
[pic]
1. Soft skills
Listening skills emerges as the most important skill, ranked first in the interviews and third in questionnaire 1. This links to three other ‘soft’ skills that all ranked in the top 10, ‘understanding of the other party’s needs and interests’ (ranked 6), ‘integrity’ (ranked 8) and ‘emotional intelligence’ (ranked 9). The senior negotiators who participated said that listening to the other party, understanding their needs and interests, and behaving with integrity and emotional intelligence add up to what they believe to be four of the most important characteristics of good negotiators. Together these four characteristics present concerns for the other party that have not emerged from the literature to date.
2. Questionnaire 2 - Negotiator perception preferences
The preferences shown by the actors in this study between collaborative or competitive approaches in Questionnaire 2 (see Figure 4.8) are not generally applicable beyond the sample of actors within this study.
24. Summary of findings
This chapter has presented the findings of all three phases of fieldwork conducted with senior negotiating practitioners, in line with the research objectives. The data from the interviews and questionnaires in the fieldwork has been presented. Many actors spoke of events or circumstances, processes, methods or tactics that had arisen in their negotiations that provided the researcher with new and unexpected perspectives. Previous research has been largely based on negotiation simulations using students or studies of negotiations in other fields, not commercial or buyer/seller negotiations. This is the first time that research has obtained data from ‘real life’ senior negotiators of deals between buyers and sellers.
The main findings were as follows:
1. Profiles of Actors
All 20 actors had ten years or more experience as a professional negotiator. 13 were buyers, four were sellers, and three conduct both buying and selling negotiations. 15 were male and five female. 14 industry sectors were represented.
2. Theme 1: Integrative Negotiations
Only one of the 20 actors had heard of the terms ‘integrative’ and ‘distributive’ in relation to negotiations, and that actor had moved from a practitioner career into an academic career. The terms are used exclusively by academics and are unknown to practitioners. Negotiators believe that whether a negotiation position is adversarial or collaborative depends on how it is presented to the other party. It may be dressed up as win-win, but it is often regarded as win-perceived win.
Figure 4.8: Negotiators’ Perception Preferences
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Sales negotiators believe that in the majority of negotiations the buyer is in a stronger position than the seller.
A common adversarial position by the buying negotiators was that the seller will keep giving concessions until the deal becomes unprofitable for them. In the majority of negotiations, the buying negotiators did not consider it their responsibility to concern themselves with the profitability of their suppliers, especially on major high value negotiations, as it was more important that they secured the best deal for their own organisation.
It was clear from what the negotiators said, that they paid lip service to the concept of win-win without buying into it. Selling negotiators in particular often referred to their ‘partnership’ with the buying organisation, whereas buying negotiators had become ‘jaded and cynical’ about the concept and found it irritating.
3. Theme 2: Use of Power and Coercion
All of the actors expressed views on the role of power in negotiations, and many sources of power were quoted. 14 actors said that they favour using power in a negotiation if they are in a position to do so. However, the research discovered that two characteristics relating to power, ‘ability to exploit power to achieve objective’ and ‘willingness to employ force,’ ranked low in the questionnaire responses at 19th and 29th respectively.
Sources of power used by buying negotiators were competition, particularly when using reverse auctions; - having a real alternative to reaching a negotiated agreement (BATNA); - the simple power of being the buyer in a market with several sellers; - confidence, and concealment of information. A BATNA is not often available as a genuine source of power. However, some negotiators believe it is part of their job to create a credible alternative to negotiated agreement.
Selling negotiators were more circumspect about the use of power in negotiations, and this supported the seller’s view that the power more usually rests with the buyer than the seller.
Buying negotiators spoke about internal conflicts in their own organisations with stakeholders who often hold on to the power of their positions within the organisation and are reluctant to release sourcing decisions to Procurement. Often this is linked to strong relationships with established suppliers. Several buying negotiators mentioned the IT function in particular as being a difficult and uncooperative stakeholder, especially in terms of source decision-making. IT Directors often still decide who they want to contract with and get their way regardless of the competitive processes put in place.
4. Theme 3: Interpersonal ‘chemistry’ between negotiators
There are a number of underpinning theories dealing with interpersonal behaviours and characteristics of negotiators, including emotional intelligence, adaptive selling behaviour, subservient seller syndrome, and others. However, the focus of these theories is on the behaviours and characteristics of individuals and not on the interaction between negotiators. The interpersonal chemistry of how negotiators interact in the context of the negotiation, commencing from the relationship building, or rapport phase, is critical in determining the progress and outcome of the negotiation, and this interpersonal chemistry may be categorised as positive or negative. Thus, whether the personal relationship between negotiators that forms at the initial stages of communication is positive or negative will determine the subsequent interaction between them and, ultimately, the outcome of the negotiation. This applies regardless of whether the meeting is face-to-face, on the telephone, or by e-mail, although face-to-face communication is always preferred by sellers. This explains why selling negotiators work so hard to influence the interpersonal chemistry to be as positive as they can make it, and work so hard to get face-to-face meetings with buyers, and why buying negotiators in competitive source selection processes resist that influence as far as they are able, or attempt to limit access to such influence equally across all competing sellers.
From the findings the interpersonal chemistry that had formed between negotiators as a feature of particular negotiations was of major importance to several actors, influencing their approaches and responses to negotiators of the other party. These had left lasting impressions on the actors, both positive and negative, though the negative ones were recalled more readily, and in several cases with raw emotion.
1. Ethics, Trust and Integrity
One of the findings was a state of ambiguity around the integrity of buyers in negotiations. All of the actors were swift to state in strong terms their integrity, often stating they would not tell lies in negotiations. However, when asked if they would mislead the other party, correct the other party’s misunderstandings, or correct their mistaken assumptions, they unanimously agreed that they would not correct them, but would mislead them. When asked if they would tell a seller that their price was not competitive even if it was the lowest price, all of the buyers agreed they would. Therefore, it is clear that although all actors regard themselves as being people of integrity, they have a transparent idea of what this requires them to do and what is allowable normal commercial practice (see Sheridan pp.47-48 of Literature Review).
Despite the ambiguity above, integrity was found to be of critical importance, and in the event of a breakdown of trust between buyer and seller, then the end of the trading relationship would follow shortly afterwards.
Often the breakdown of trust would be in the negotiators’ own organisations, and would be instigated by senior stakeholders in the buying and selling organisations having met informally, often over dinner or on a golf course, and agreed the outline of a deal. This would undermine both buyer and seller and was usually a serious demotivating factor.
The research found that most of the interviewees had been caught out by deliberate deception ploys where the negotiator had agreed to give a concession but had not incorporated it into the contract, hoping that the its absence in the draft would go unnoticed. This had led to all of the actors not trusting their counterparts in major negotiations and seeking to retain control of contract drafts and ensuring the use of ‘track changes’ in Word.
5. Theme 4: Persuasion Techniques
As mentioned above in Theme 2, the findings from the field research indicate that of the five traditional persuasion techniques, coercion is most likely to be used initially, if either negotiator believes that he or she is in a position of power over the other. If that succeeds, then the negotiation is won by the more powerful party. If not, then logical persuasion is more likely to be favoured than the other remaining traditional techniques, which are bargaining, emotion and compromise.
Several actors even stated that they are more likely to continue with logical reasoning even when it is not working, rather than shift to another technique. The actors expressed difficulty in dealing with illogical negotiators who either genuinely did not follow the logical argument put to them or pretended not to follow it in order to hold their negotiating position.
Two important points emerged from the research regarding bargaining, the first being that it is fundamental to negotiation. Of all the negotiation techniques available, it is bargaining that is the core negotiation activity around which all others should be centred. Bargaining is negotiation, and negotiation is bargaining. The second and equally important point was that all statements in the bargaining context must be predicated on the word ‘if’. The key to bargaining is the concept of exchange, and conditional offers. Without the offer of exchange, then it is not bargaining, but merely discussion.
The majority of actors mentioned emotion as a negotiation technique they did not favour, although eight actors did favour it. This was a surprise to the researcher as emotion has traditionally been taught as being an important technique, particularly by Paul Steele and his training company PMMS.
Compromise was another technique not favoured by the majority of actors. This was stated to be because it seemed like a failure to compromise when all other attempts to negotiate had been lost. Another reason was because there was ambiguity in the minds of some of the actors regarding whether compromise meant simply splitting the difference, rather than compromising in a positive manner, as part of bargaining.
Two additional persuasion techniques emerged from the research, that have not been traditionally identified as negotiation techniques, these being promises, and understanding the other party’s genuine objectives.
6. Other findings from interviews
1. Behaviours of effective negotiators
The research found that the actors believe that effective negotiators are good at listening, planning, thinking ahead, thinking on their feet, communicating effectively, focusing on the target outcome, and developing alternatives to a negotiated agreement (BATNAs). All of the actors emphasised the importance of thorough preparation and planning to effective negotiators. However, there was little consensus on how to prepare effectively, and no consensus on how the detailed planning process should be approached.
The research found that the five traditional persuasion techniques used in negotiation are not properly explained in the CIPS level 4 syllabus, and require a greater understanding, particularly the importance of bargaining as central to negotiation, and the concept of exchange in bargaining.
The research also found that negotiators are influenced by their personal feelings about their opposing negotiators and how they interact with them. These personal interactions emerge around whether they like or dislike, trust or distrust, respect or hold in contempt, consider them fair and reasonable, and whether they perceive integrity or deceit.
The research also found that if negotiators are in a position of power over their opponents they will use it, but they resent power being used against them.
The research also found that there are only four possible responses to a proposal: accept, reject, counter-propose or ignore.
The research also found that negotiators are motivated by personal drivers, which may or may not be the same as the drivers of the organisation on whose behalf they negotiate. These motivating factors may not be assumed; in major negotiations it is important to understand the personal motives of the other party’s negotiators.
The research also found that most negotiations are adversarial in nature; collaborative negotiations happen rarely and only in special circumstances, a perceived exception being those negotiators who adopt the approach of ‘understanding the other party’s genuine objectives’ discussed in this research.
Finally, the research found that female negotiators are at an advantage over males because men don’t feel that they are losing face when they concede to a woman as much as they would in conceding to another man.
In the next chapter these findings are discussed in line with the research objectives and the extant literature covered in Chapter 2.
CHAPTER 5: DISCUSSION OF FINDINGS
5. Introduction, chapter overview, aims and objectives
Chapter 4 identified the findings from the different phases of field research. This chapter evaluates the outcomes of the research from Chapter 4 in line with both the extant literature on negotiations between buyers and sellers and the research aims and objectives. The specific objectives of this chapter are to:
• Evaluate the results in line with the research questions.
• Discuss the results in line with the extant literature on major negotiations between buyers and sellers and the theoretical debates underpinning them.
• Synthesise the underpinning theoretical concepts from the secondary data (the literature review) and the primary data from the interviews and the questionnaires to arrive at a set of negotiation principles.
• Present the contribution to knowledge and practice in buyer-seller negotiations, via a number of negotiation principles which apply to commercial negotiations between buyers and sellers.
• Identify the limitations of this research.
• Present the implications of the findings for professional practice.
25. Additional analysis
Following the initial submission of this work, the researcher went back and carried out further analysis of the primary data collected from the interview and questionnaire phases. This work is now incorporated and the underpinning theoretical concepts identified are further developed throughout the thesis.
26. Theme 1: Integrative Negotiations
The research found that most negotiations are adversarial in nature; collaborative negotiations happen rarely and only in special circumstances. The two dominant discourses in the literature concerning this topic are challenged. These being firstly, that there are two approaches to negotiation, integrative and distributive, and secondly, that distributive negotiation is an old-fashioned, traditional, arms-length and adversarial approach that has no place in modern procurement, and which has been largely discontinued in favour of a more integrative, collaborative approach in negotiations between buyers and sellers.
Buying and selling negotiators do not recognise the terms ‘integrative’ and ‘distributive’ negotiations (19 out of 20 actors). Even though not familiar with the terms, negotiators are familiar with the terms collaborative (win-win) and adversarial (win-lose) negotiations. The main finding on this topic from the research is that in business negotiations between buyers and sellers representing their organisations, there is a limited role for an integrative approach to negotiation, especially as far as buyers are concerned. Actors repeatedly stated that as a negotiator they would not be doing their job if they approached negotiations in a collaborative, or ‘win-win’ style. They reasoned that as they are paid to negotiate the optimum deal for their employer, they could not be getting the best deal for their own organisation if they adopted some sort of a notional responsibility for looking after their opponent’s organisation, and it would be confusing their moral obligations. Secondly, they would be opening up their position as negotiator to be exploited by their opponent, and this was contrary to all their natural inclinations. Actors repeatedly said that business is not, and has never been conducted, in this way and that a fundamental of business is that it uses all forms of competition to succeed financially over its rivals.
Buying negotiators stated that that longer term ‘partnerships’ and contracts rarely serve the buying organisation with any quantifiable advantage or benefit, beyond security of supply and in some cases, price certainty. One writer, Ramsay, stood out alone in the literature review, consistently maintaining that the academic theories around collaborative negotiation were just plain wrong. These conclusions about negotiations between buyers and sellers being primarily adversarial or at least ‘arms-length’ and only occasionally collaborative, exclude one specific negotiation technique: ‘understanding the other party’s genuine objectives’. It may be that this technique is mistaken in some circumstances for a collaborative approach. The theoretical debate around integrative negotiations is extended by the following propositions, derived from the findings:
• Sellers frequently talk about ‘partnerships’ and ‘special relationships’ when there is no underlying partnership, joint venture or any other factual intent to partner with the customer.
• This abuse of the terms ‘partnership’ and ‘win-win’ have been overplayed by sellers since collaborative negotiation became fashionable in the early 1980s.
• Buying negotiators found this selling technique irritating and tedious, and it has a negative impact on the buyer-seller relationship.
• Regardless of the fact that they may pay ‘lip service’ to these concepts, buying negotiators at best may describe these arrangements as ‘win-perceived win’, but in reality regard them as commercial transactions.
• In most negotiations these statements by sellers are ignored by buying negotiators.
27. Theme 2: Use of Power and Coercion
One of the research questions is: “Who has the power in major negotiations between buyers and sellers?” A subsidiary question is “What factors determine the balance of power?”
The findings showed that the majority believed that power in buyer-seller negotiations is most often held by those who are most effectively prepared, those who have real alternatives (BATNAs), and those who are genuinely prepared to walk away: the factors which are perceived to affect the balance of power between buyers and sellers. They also demonstrated that the majority believed that power rests more with the buyer than the seller, especially where competitive bargaining is used in the sourcing process. The research also found that if negotiators are in a position of power over their opponents they will use it, but they resent power being used against them. The use of power to coerce the other party was much favoured by the actors, second only to logical reasoning in the number of times it was supported (14 actors).
The actors made two statements which recurred regularly throughout the interviews relating to power: firstly, that they would have no hesitation in using (abusing) power, if they were in a position to do so, if it enabled them to achieve their objectives, and secondly, that the majority of them had suffered bullying by opponents in the past and spoke about it leaving them with memorable wounds, which they would never forget. They spoke about seeking retaliation and revenge on those who had treated them in this manner. The paradox is that the same negotiators would have no hesitation in doing exactly the same to their opponents. Although the actors had much to say about use and abuse of power in negotiations, and identified 30 different sources of power, the researcher was unable to obtain a clear statement of how power is actually evaluated and then used in a negotiation. If Francis Bacon (1597) was correct when he reputedly said that ‘knowledge itself is power’, it is not clear just how this knowledge might be converted into usable negotiation leverage. The concept becomes even more elusive when viewed from the perspective that says that power is in the mind of the negotiator who believes that he or she has it.
Porter and his ‘Five Forces of Competition’ (Porter, 1980) (see Figure 2.1) were not used by any of the actors. The actors were asked whether they were aware of Porter’s ‘Five Forces’ or Kraljec’s Portfolio Matrix or any other well known (in academic circles) techniques. None of the actors related to these in any way. The actors gave their own views of the sources of power in negotiations (Figure 4.3). There was an intense depth of feeling by Actor 1 over the bullying he had suffered in his small company at the hands of several large supermarket chains. The theoretical debate around coercive negotiations is extended by the following propositions, derived from the findings:
1. Test of the Power Balance between the Parties
The use of power in the form of coercion is one of the other traditional five persuasion techniques used in negotiation. The initial phase of a negotiation is a test of the power balance between buyer and seller. If, during this initial stage, one of the parties emerges as dominant over the other, and this results in an agreement that both parties are prepared to accept, then the negotiation is over, and has been determined by the power balance favouring one party over the other.
There was unanimous agreement that when in a position of power over their opponent, all of the negotiators would take advantage of it.
At that point there are two possible outcomes:
In some circumstances, the negotiation may end at that point, because the outcome is at variance with the expectations of one of the parties to such an extent that the party decides to withdraw to reconsider its position.
Alternatively, if the initial test of the power balance between buyer and seller is inconclusive, and neither party emerges as dominant over the other, then the negotiation may enter a second phase, in which other factors are brought in to play. This is when the many ‘interpersonal chemistry’ elements become more important.
It is possible that a negotiation could take place and the balance of power between the parties not be tested, for a variety of reasons; for example, the party with the power may not realise they have it, or the parties may not explore the situation in sufficient depth to expose the power position of one over the other. Either or both parties may not be properly prepared. Either or both negotiators may be inexperienced.
2. Control of contract drafts
No references to this practice were identified in the existing literature. It was found that experienced negotiators prefer to control the drafting process. Similar to the advantages to those who control minutes of meetings, this responsibility carries a certain power. At one end of the spectrum this could be simply influencing the drafting, which will always be subject to interpretation and can be excused for slight misinterpretation. At the other end, agreed points may be missed out completely and they will only be picked up if there is a vigilant negotiator on the other side who is keeping accurate notes and methodically reviewing them against the latest draft each time one appears.
3. Removal of a negotiating opponent
No references to this practice were found in the literature review. In the previous chapter it was found that four buying negotiators had identified that if they had been dissatisfied with the leading sales negotiator they had exercised the power of their position and requested the removal of that negotiator. This highlights that the balance of power identified here in most circumstances favours the buying organisation, that controls the buying process, and can request the removal of the sales negotiator. In the reverse situation, the selling organisation does not normally have the option of requesting the removal of the buying negotiator. This contributes to the belief of sales people that the power usually rests on the side of the buying organisation.
4. Database of commercial interactions
No references to this practice were found in the literature review. James’ organisation had introduced a global database of all commercial interactions with suppliers and potential suppliers. This is the purchasing equivalent to marketing’s Customer Relationship Management (CRM) database. It is an invaluable negotiation aid for buying negotiators in global organisations, whether they have adopted a centralised or decentralised procurement structure. Organisations with effective databases of this type are rare, and require an investment of resources to enable them to be populated, but once they are implemented they yield rich rewards. It is frequently the case that selling organisations have put forward proposals, negotiated the details, and either concluded a contract or not, with another part of the global organisation. Often this can be the case in several countries. Without the ability to bring all of this data together in a single database across all geographies in which the organisation operates, that organisation is seriously hampered and will miss out on opportunities to pick up deals already offered to the organisation elsewhere.
5. The "fait accompli" / hiding behind policy or rules
No references to this practice were found in the literature review. Ben, Head of Commercial Practice in a city law firm, claimed that this feigned ‘policy’ works almost all of the time. This is bullying by blaming the higher authority of the policy for what they clearly believe is morally wrong. The stance of the negotiators is interesting - they themselves don't think the policy is reasonable either and in a different organisation they would probably accept those same terms. However, what is interesting is that they do know that it is an optimum position not to give way: they are often content with the result itself, and even more so that they can get to this result without having to make the refusal themselves because they can rely on the power of a dictate coming down from a higher authority.
28. Theme 3: Interpersonal ‘chemistry’
A number of underpinning theories dealing with interpersonal behaviours and characteristics of negotiators were identified in the literature review, including emotional intelligence, adaptive selling behaviour, subservient seller syndrome, and others. However, the focus of these theories is on the behaviours and characteristics of individuals and not on the interaction between negotiators. The interpersonal chemistry of how negotiators interact in the context of the negotiation, commencing from the relationship building, or rapport phase, is critical in determining the progress and outcome of the negotiation, and this interpersonal chemistry may be categorised as positive or negative. Thus, whether the personal relationship between negotiators that forms at the initial stages of communication is positive or negative will determine the subsequent interaction between them and, ultimately, the outcome of the negotiation. This applies regardless of whether the meeting is face-to-face, on the telephone, or by e-mail, although face-to-face communication is always preferred by sellers. This explains why selling negotiators try to influence the interpersonal chemistry to be as positive as they can make it, and strive to get face-to-face meetings with buyers, and why buying negotiators in competitive source selection processes resist that influence as far as they are able, or attempt to limit access equally across all competing sellers.
From the findings the interpersonal chemistry that had formed between negotiators as a feature of particular negotiations was of major importance to several actors, influencing their approaches and responses to negotiators of the other party. These had left lasting impressions on the actors, both positive and negative, though the negative ones were recalled more readily, and in several cases with raw emotion. Six inter-personal behaviours, collectively part of ‘interpersonal chemistry’, were identified from the interviews as having significantly influenced major negotiations in which the actors had participated. These were: establishing rapport, showing either respect or contempt towards the negotiator, liking or disliking the negotiator (whether the negotiator knew or not), trusting or mistrusting the negotiator, and being perceived to demonstrate integrity, fairness and/or charisma, or not. The research found that negotiators are influenced by their personal feelings about their opposing negotiators and how they interact with them. One of the important findings that emerged was that these perceptions of negotiator behaviour are not necessarily mutual. If one negotiator perceives a negative behaviour or trait in the other that they find offensive, then that is all that is required to kill the negotiation. Minimal information emerged from the literature review about negotiators liking or disliking each other. Russill (1997, p.165) said that one of the four most important characteristics for a successful negotiator was being likeable. No other reference was found to support the notion that negotiators are influenced by whether they like or dislike their negotiating opponents.
Many of these feelings arise as a result of the behaviours and interactions of negotiators. This is believed to be an important finding. The actors were never more vehement in their accounts of how they felt about particular negotiations than when describing the behaviours and characteristics of negotiating opponents. In summary, if they warmed to the person on the other side of the table, then anything and everything could be achieved without much difficulty. If the reverse was true, then very little would be achieved. There would be resentment harboured and the possibility of future business would be unlikely. A further set of factors relate to how the persuasion techniques may be applied - with humility, with empathy, with integrity and trust, with charm, with fairness and reasonableness, with credibility, with understanding, with intent to deceive, with a short-term adversarial approach. These factors, characterised as personal interactions, emerged as highly important to the negotiators participating in the research.
While some of these characteristics and behaviours appeared in the literature (see section 2.4.4), particularly personality and conflict styles, they do not appear as a comprehensive mix of factors. The solitary alert to the importance of these interpersonal relationships is found in Brown et. al. (1966) where they warn against the use of coercion as a negotiation technique because it is ineffective. All of the actors, with not one exception, recounted memories of negotiators they had either liked or disliked. These memories clearly did not fade over time and remained to influence their attitudes towards these individuals in the future. The buying negotiator can request the removal of the selling negotiator fairly easily in most situations. Conversely, the selling negotiator has no such opportunity in most circumstances.
1. Test of the Relationship between the Parties
Only when one negotiator is not in a dominant position is it that the emotional intelligence elements come into play. At this point in a negotiation, the power balance between the parties has been tested, but no agreement has been reached. One of two situations now exists: either a) neither party has emerged dominant over the other, or b) the party in the weaker position does not accept the current status as a basis for reaching agreement.
It is now of critical importance how the parties behaved to each other in the previous phase, and in particular how each party perceives the other, in relation to trust and integrity. The actors constantly repeated that it was these interpersonal ‘chemistry’ issues that dominated the outcome in many major negotiations, and left lasting impressions on the negotiators. According to them, the traditional influences on negotiation success, such as preparation and planning, or choice of persuasion techniques employed, were of less importance than the relationships that occurred between negotiators around these elements. These include the importance of establishing a rapport between the parties from the start, or prior to the negotiation.
It became clear from the frequency of reference to them, that these interpersonal issues, and one of the elements of emotional intelligence in particular, conscientiousness and integrity, seemed to dominate and kept returning to the fore in many of the interviews. These elements emerged as a number of variables that frequently occurred together, power, integrity, trust (fairness) and emotion. These variables played out in negotiations and these were recurring themes in the way they were reported by the participants: the negotiator commented on whether he or she had used power (coercion) to achieve their aim, whether the other negotiating party had integrity, the emotions the negotiator had felt at the time (and in many cases still felt) and whether the other negotiating party was perceived to be fair.
From the interviews emerged several areas which could be described as personal characteristics, which are currently grouped together and extend the concept currently collectively known as emotional intelligence. These elements recurred throughout the interviews as actors kept returning to issues around emotional intelligence which had significantly influenced their major negotiations. Emotional intelligence is a term used to group together seven sub-elements, 1. Self awareness, 2. Conscientiousness and integrity, 3. Motivation, 4. Emotional resilience, 5. Intuitiveness, 6. Influence, and 7. Interpersonal sensitivity (Higgs and Reynolds (2002)).
The issues circled around whether the negotiators held each other in respect or contempt, liked or disliked each other, trusted or distrusted each other, and whether the behaviours they saw demonstrated integrity, fairness or charisma. One of the factors which could influence the perception of these elements was the self-confidence of the negotiators.
Emotion has long been established as one of the traditional five persuasion techniques used in negotiation (Harwood, 2006). Emotion was identified at different levels in the interviews: firstly it had played an important role in some of the most memorable negotiations that the interviewees recalled, either their own emotions or those displayed by their counterparty to the negotiation; secondly, emotion was closely linked to the concepts of integrity and fairness, and these concepts were mentioned together to a notable extent; thirdly, these recollections clearly stirred up emotions in the participants just by recalling these negotiations, even though in several cases they had occurred some years ago. Finally, emotion was also closely linked to the use or abuse of power, usually where the negotiator had been subjected to coercion by the other party.
2. Two critical variables
The outcome of every negotiation is determined by a combination of these two variables, the power balance and the interpersonal chemistry between the negotiators.
Regarding the power balance, there are four possible outcomes:
a) one of the parties emerges as dominant over the other, and this results in an agreement that both parties are prepared to accept
b) one of the parties emerges as dominant over the other, but the weaker party does not accept the terms offered, and continues to negotiate.
c) one of the parties emerges as dominant over the other, but the weaker party does not accept the terms offered, and the negotiation breaks down with no agreement reached.
d) neither party emerges as dominant over the other, therefore the negotiation continues into a second phase.
Regarding the ‘interpersonal chemistry’, there are two possibilities for the relationship between the negotiators, it is either positive or negative.
3. Integrity
The field research exposed an area of ambiguity and duplicity of standards that applied across all actors. The contradictory views identified in the literature review, where negotiators are expected to hold a special position of trust and at the same time are expected to use Lewicki et al’s (1985) “lying and deceit are an integral part of effective negotiation”, were reflected with the same ambiguity in the findings. During the interviews discussions on integrity frequently started out with high moral statements in which the actors protested their integrity in hypothetical terms. However, when the subject homed in on specifics they all either shifted position or presented a different slant on how they negotiate in practice. The researcher was left in no doubt that Lewicki’s statement is true in almost all cases. Only one actor who participated in the research staunchly held to her views that she would not mislead the other party in a negotiation in any way, and even she said that she could not be responsible for the other party making incorrect assumptions based on what she had or had not said to them.
However, further analysis of the findings around the dichotomy regarding the ambiguity and apparent duplicity of standards led to the conclusion that integrity is perceived by negotiators at two different levels, a high, almost superficial level, in which conventions of the way business is negotiated include Lewicki et al’s (1985) “lying and deceit”, and a deeper, more fundamental level of integrity, which is more important in determining negotiation outcomes. It is this deeper level of integrity which the actors held firm views on, and which they were not prepared to compromise. It was only after this conclusion was reached that the complex and conflicting perceptions of the actors around integrity made sense. Further and more detailed analysis of this dichotomy, ambiguity and apparent duplicity of standards led to the conclusion that there were, in fact, two levels on which integrity is perceived by the actors.
4. Personal motivations
One of the research findings uncovered that negotiators are motivated by personal drivers which may or may not be the same as the drivers of the organisation on whose behalf they negotiate. Indeed, the personal motivations of the seller in particular, primarily around the selling negotiator’s remuneration, are often in conflict with the apparent motives of the selling organisation. Therefore these motivating factors may not be assumed; in major negotiations it is critically important for the buying negotiator to understand the personal motives of the other party’s selling negotiators.
Figure 5.1: Selling negotiators’ possible personal motivations
|Sign new customer |
|Sign contract |
|Commission scheme |
|Payment conditions |
|Recurring monthly revenues |
The finding identified in 4.2.4, namely that a sales negotiator had been set a target which did not involve revenue or profit but getting a single project established with the supplier, were a revelation, which raised a number of observations around what would have happened if the seller had not volunteered the information, or offered the consulting work free of charge, and what would have happened if the buyers had not discovered the underlying motives of the seller.
The literature review identified the traditional importance of preparation and planning in negotiation, and in the field research all of the actors emphasised the importance of thorough preparation and planning to be effective as negotiators. However, there was minimal consensus on how to prepare effectively beyond preparation in order to support logical reasoning, and to create credible and convincing alternatives (BATNAs). There was little discovered in the literature review about researching the individual negotiators and their personal motivations. This emerged from the interviews, where it became clear that buying negotiators try to understand the personal motivations of the selling negotiator, as these may be at variance from the reasonable suppositions of the motivations of the selling organisation. By exposing the components of the motivational package of the selling negotiator, the buying negotiator may identify components of a deal that fall outside of the selling negotiator’s motivational package, and which are therefore likely to be less contested than components which form part of it.
29. Theme 4: Persuasion Techniques
The literature review identified five traditional persuasion techniques that have been established in the literature on negotiation over the past three decades since they were first identified by Steele et al. (1989). These are shown in Figure 5.2.
Figure 5.2: Persuasion techniques – traditional
|Bargaining |
|Logical persuasion |
|Coercion |
|Compromise |
|Emotion |
Source: (Steele et al., 1989)
However, Steele et. al. op. cit. contains no references indicating the source of these persuasion techniques. They had earlier appeared in Farrington (1980), described as ‘attitudinal structuring’ techniques where the source was identified as Brown et al. (1966). In fact Brown quotes earlier sources for these ‘processes that lead to an accommodation of viewpoints’ in the middle stages of negotiation as part of their detailed analysis of ‘negotiations with antagonists’, these being (Berrien, 1944) and (Joy, 1955). There were many different answers to the question ‘what persuasion techniques exist in negotiations?’ many of which covered techniques, such as collaborative and adversarial, which were identified as the main approaches from the CIPS negotiation syllabus (see Figure 4.4 on p.102). The recognisable techniques were categorised as techniques and analysed accordingly. However, others of these responses, such as ‘respect’ and ‘liking’ were more aligned to behaviours, or personality traits or characteristics, than techniques, and these were appropriately categorised and analysed. As was seen from the analysis in Figure 4.4, logical persuasion was the technique which was most commonly cited by the actors (15 out of 20), followed by ‘power, the use of coercion’ (14 out of 20).
1. Logical Persuasion
Logical persuasion usually comes first in any list of persuasion techniques (Harwood, 2006, CIPS, 2011), and it is the one technique most mentioned by the actors. Six of the actors favour logical persuasion as their primary negotiation technique preferred above all others. This accords with the literature review – that logical reasoning is probably the most commonly used persuasion technique in business negotiations (Steele and Beasor, 1999). Steele’s earlier caution (Steele, 1990), “Don’t depend solely on logic – vary your style”, seems appropriate advice given that it is so much the preferred technique of choice among the actors. It is almost as though they realise that they should not be relying on logical argument so heavily but cannot help themselves.
Actors highlighted two reasons not to rely on logical persuasion too heavily. Firstly, it assumes that the other party is logical and will follow your logic. However, some negotiators are not logical, and no matter how often a logical argument is repeated, they will not accept the logic presented. Business negotiators rarely act completely rationally (Herbig, 1991). This was discovered in the literature review. Secondly, some negotiators will accept the logic of the argument but refuse to change their negotiating stance. This was identified during the interviews (Actor 2). This can be more difficult to deal with. When someone accepts your logic but refuses to change their position, how do you move forward? The only option left is to use a persuasion technique other than logic. Only one actor said that he preferred to use a combination of logical reasoning backed up by an emotional argument (Actor 2).
Of the 15 actors that favoured logical persuasion, six claimed that this was their primary negotiation technique above all others and were reluctant to be shifted from it, even when it was clear that it was not having the desired effect on the other party. Maintaining this commitment to their favoured course of action even when that commitment constitutes irrational behaviour on the part of the negotiator, is an example of a psychological phenomenon known as ‘escalation of commitment’ (Brockner, 1992).
2. Bargaining
The only reference that appears in the CIPS Syllabus on negotiation (Harwood, 2006) on the subject of bargaining is:
“The use of concessions, based on a bundle of variables to reach agreement. Again, both parties participate.”
‘Derived from Steele et al. (1989)’
Although the source is quoted as ‘derived from Steele et al (1989)’, this is not an accurate summary of what Steele et al. op. cit. has to say on the subject of bargaining, rather it is a misrepresentation, because they actually give four rules of bargaining, the fourth one of which states ‘get a return for any concession you make’. The original source does make it clear that in bargaining there is some form of trading concessions. However, it does not emphasise the nature of exchange. It omits the key concept of ‘if . . . then’. It leaves the situation vague enough that one may think that bargaining commences with a concession, in the hope that a reciprocal concession may be forthcoming in return. This point about conditional offers was identified as an important principle in negotiation, though it was identified in a text book and not in the academic literature by Kennedy (1982). Kennedy (1982) made the point forcefully that he was hostile towards any unilateral conceding under any pretext whatsoever, or for any purpose. He kept reinforcing his point that bargaining, the heart of the negotiation process, is an exercise in exchange, where concessions are traded, never given away. This point has never been incorporated into the academic literature.
3. Emotion
The findings related to emotion as a negotiation technique were interesting in that 12 of the 20 negotiators did not favour using emotion in any circumstances. This was unexpected, although there may be two possible explanations. Firstly, it is clear from examining the interview transcripts that there was a common belief among the actors that use of emotion was synonymous with making an emotional pleading to the other party. This is a misconception. As Huthwaite (2004) observed, effective negotiators revealed their emotions nearly twice as much as average negotiators, and emotion was closely linked with the ability to build trust with the opponent. Secondly, there are repeated warnings about the dangers of exposing negative emotions in negotiations throughout the literature, of which Steele et al. (1989) is typical, warning ‘Control your emotions; don’t let them control you’. Contrary to the above concerns eight of the negotiating actors were quite comfortable using emotion as just one of the tools in their negotiating armoury.
4. Compromise
The findings related to compromise as a negotiation technique were mixed in the extreme. Whereas nine of the 20 negotiators did not favour compromise and some of them spoke in a derogatory manner about compromise and those who use it, one very senior negotiator spoke in glowing terms about compromise as a ‘noble endeavour’. Oliver, the senior negotiator, went on to say that he had never done a deal where some element of compromise wasn’t present. There could be similar reasons for the negative perception of compromise as those for emotion. Firstly, Steele et al.’s (1989) advice never to compromise except as a very last resort, and secondly, the fact that compromise has got a bad reputation for being a 50/50 ‘split down the middle’. However, that is not the only way to compromise. There is an alternative which is more akin to bargaining, whereby a compromise solution is negotiated because neither party is able to get what it ideally wants on a particular element of the deal.
5. Revealing two new Persuasion Techniques
In addition to the five persuasion techniques seen above in Figure 5.2 that have
Figure 5.3: Seven Persuasion techniques
|Bargaining |
|Logical persuasion |
|Coercion |
|Compromise |
|Emotion |
|Promises |
|Understanding other party’s genuine objectives |
become established over the past three decades there are two additional techniques which need to be added into the tools of professional negotiators. These are, ‘understanding the other party’s genuine objectives’ and promises. Both are discussed below.
6. Understanding the other party’s goals and objectives
This was one of the most interesting findings of the research. The literature review highlighted that there was a lost, sixth persuasion technique, or ‘attitudinal structuring technique’ identified by Farrington (1980). Despite being correctly referenced and attributed to Brown et al. (1966), this became lost and the other techniques became established after they were repeated in Steele et al.’s (1989) popular work on negotiation which contained no source references. This would have been inconsequential had there been no place for this lost technique in negotiations between buyers and sellers. However, the findings of this research identified that this technique is used in negotiations, and identified that two senior negotiators rely on this technique as their most fundamental and relied upon approach to negotiation. It would therefore confirm that Brown et al. op. cit. were correct when they included it as one of their six ‘attitudinal structuring’ techniques almost half a century ago.
There could be a number of reasons why this technique lost favour amongst writers and academics teaching the subject of negotiation. Firstly, it is easy to give simple examples of how the other five traditional persuasion techniques can be used, whereas it is not as straightforward to give convincing examples of how an understanding of the other party’s goals and objectives moves a negotiation forward. The actors who use this technique described with enthusiasm how they had found the key to a successful negotiation outcome emerged as soon as they understood the underlying motives of the other party with whom they were negotiating.
7. Promises
The idea of making a promise to the other party in a buyer-seller negotiation in exchange for a concession was not found in the literature review. On reflection, given the six other ‘persuasion techniques’ include threats, it seems rather odd that it does not also include promises. The research revealed that several of the negotiators said that they commonly give promises in exchange for gaining concessions.
30. Female negotiators
The research found that female negotiators may be at an advantage over males because men don’t feel that they are losing face when they concede to a woman, at least not as much as they would in conceding to another man. The literature review identified that where studies have compared negotiators by gender, females tend to come out as less successful (Faes et al., 2010). The finding from this research contradicts that and suggests that female negotiators are actually at an advantage over their male counterparts. This may be due to the fact that the actors in this study are all very senior negotiators whereas the negotiators studied in previous research may have been less senior. It may be that average female negotiators adopt feminine ‘girlish behaviours’ as outlined by Frankel (2004), rather than the grown up and more man-like behaviours which Frankel advocates for women to be successful in business, but this would need to be investigated.
31. Discussion of other findings
Many other findings emerged from the research that were outside of the scope of the main aims of the research and the four research questions. These are believed to be of interest to those researching the subject of negotiations between buyers and sellers, so are included here.
1. Planning and Preparation
The research found that negotiators confirm the ubiquitous perspective from the literature, that planning and overall preparation are key to success in negotiation. The literature review identified that effective planning is an essential requirement for success in negotiation (Lewicki et al., 2006) although the method for doing this varies according to different authors (Atkinson, 1990, Fisher and Shapiro, 2005), and it has been established that negotiation planning is the exception rather than the rule according to Huthwaite (Kawamoto et al., 2009). All of the actors in this study identified preparation as a very important part of negotiation. However, reinforcing what was found in the literature, there was little consensus on how this preparation should be done, with three separate areas of focus. Some believed that their preparation work should focus on the subject matter of the negotiation, complete with analysis of the opening position, and predicted bargaining range etc. A second group held a broader view of preparation, incorporating assessment of the opposing organisation, their negotiation team, and the individuals within it. A third group was more interested in researching the background, reputation and negotiating characteristics and behaviours of the individuals they were going to face in the negotiations, rather than preparing for the actual negotiation itself. The Huthwaite organisation (Kawamoto et al., 2009) identified that average negotiators tend to spend time on preparation but little time on actual planning for the negotiation, and this was borne out by the actors.
The topics commonly researched during the preparation and planning process are shown in Figure 5.4.
Figure 5.4: Traditional topics for research
|Subject matter (content of the negotiation) |
|Definition of the issues |
|Definition of the parties’ interests |
|Supply market |
|Supplier organisation |
|Negotiator(s) |
Preparation for several of the actors consisted of information gathering, covering a broad range of tasks including information on the subject matter to be negotiated, the supply market, the leading suppliers in that market, trends in the market and, something not found in the literature, information about the individuals they will be negotiating with. The subject matter of the negotiation is key, and fundamental to success in the negotiation. The supply market and the supplier organisation(s) have also traditionally been researched by negotiators as a matter of course. Areas that have traditionally been covered less thoroughly are definition of issues and interests of the parties, and the least researched area, the negotiator(s) on the other side of the table.
The revised list for preparation and planning below shows that the subject matter, the supply market and the supplier organisation(s) are still key.
Figure 5.5: Comprehensive topics for research
|Subject matter (content of the negotiation) |
|Definition of the issues |
|Definition of the parties’ interests and rights |
|Definition of power balance |
|Supply market |
|Supplier organisation |
|Negotiator(s) |
However, the next three elements requiring preparation and planning are now brought together, definition of issues, interests and rights, and the power balance. It will be noted that although interests are combined with rights, they are often perceived as closely related, especially in relationships where there is a history. Lewicki et al. (2010) introduced three approaches to dispute resolution, being interests, rights and power, and these elements of any negotiation must be adequately covered by the competent negotiator in the preparation and planning phases. New topics added to this traditional list are gaining an understanding of the balance of power between the parties, and understanding the negotiator as an individual.
2. Behaviours, skills and characteristics of effective negotiators
The literature review showed that beyond a few behaviours, there was little consensus on what constitute the behaviours of effective negotiators. Several writers (Kennedy, 1982, Steele et al., 1989, Sheridan, 1991, McCormack, 1995, Moffett and Youngdahl, 1999, Farrington, 2006) said that effective negotiators regard everything as negotiable. Steele op. cit. (p.66) said that effective negotiators envisaged a far wider range of potential variables, openings and outcomes than average negotiators. McCormack (1995) took an aggressive position towards the other party in a negotiation and he:
a) Took exception to every point made by the other party as a unilateral decision made without his agreement.
b) Believed that most negotiation environments had been specially constructed in order to give additional power and leverage to the other party.
c) Anticipated that he would encounter various blocking tactics and that he needed to be mature and experienced enough as a negotiator to deal with them without reacting emotionally.
The top ten skills and behaviours of effective negotiators from this study presented in the previous chapter were extracted from the combined results of the interviews and questionnaire one (see Figure 4.7 on p.120). The negotiators put listening skills at the top of their list of top ten skills and behaviours in the interviews, followed by focus, persistence and determination, subject matter knowledge, and in sixth place, understanding the other party’s needs and interests. Russill (1997, p.165) said that these behaviours or characteristics came down to four things; confidence, skill as a person-watcher, being likeable and ability to manage themselves and the situation in the heat of the debate. The literature review also identified the Huthwaite organisation as the source of the most thorough and robust research into negotiations between
Figure 5.6: Characteristics of effective negotiators ranked in importance from different studies
buyers and sellers over the past thirty years (Huthwaite, 2004). Unfortunately, this was always focused on the seller’s perception of the negotiation, aimed as it is at increasing sales for negotiators on their training courses.
3. Focus on the end result
Three other related characteristics, ‘Focus on target outcome’ (ranked 2nd in the interviews), ‘Persistence and determination’ (ranked 3rd in the interviews and 2nd= in questionnaire one) and ‘Clarity of thought under pressure’ (ranked 1st in questionnaire one and 7th in the interviews), combine to present a level of focus and determination to see the required end result not identified from the literature review. This goes further than simply setting targets, as identified in the literature review (Russill, 1997); (Lewicki et al., 2006) or even detailed negotiation planning advocated by Fisher and Shapiro (2005) and even more thoroughly Atkinson (1990). Perhaps if their ideas of detailed planning had been incorporated into the mainstream purchasing and supply management syllabus and teaching then the focus on target outcome and persistence and determination may have become recognised as essential drivers in negotiations. The actors are saying that these characteristics are very important in negotiations.
4. Questionnaire 1 - Perception of the importance of effective negotiator characteristics
The list of 34 negotiator characteristics in this questionnaire instrument were first used by Karrass (1968). However, it is not an exclusive list of all possible characteristics and this became apparent because other characteristics were identified by the actors in the interview phase as also being of high importance to them.
5. Comparison with earlier studies of effective negotiator characteristics
The most notable differences between the findings of the earlier research by Raiffa (1982) and Harwood (2003), and this study (see Figure 5.4) are as follows: Whereas the senior negotiators in this study believe that persistence and determination are very important (ranked fourth out of thirty-four characteristics), in the earlier research it was only of medium importance. Similarly, the actors in this study determined personal confidence to be of high importance, whereas the earlier studies ranked it as low as 20th and 21st respectively. What is surprising is that these senior negotiators did not rank preparation and planning as important (ninth out of thirty-four) as the actors in the Raiffa (1982) study (first). It is interesting to note that ‘understanding the other party’s needs and interests’ was considered more important than in the earlier studies. Moreover, a further surprise is that this sample of senior negotiators did not consider subject knowledge of negotiation content as important compared to its importance in the earlier studies, and do not consider negotiation experience very important compared to the earlier studies.
6. Linkage of issues
Linkage of issues was identified in the literature review, as part of the second step in the planning process. However, Lewicki et al. (2006, p.118) only refer to the linking of issues which are genuinely connected. It does not appear that Lewicki et al. (2006) considered that this may be used as a tactic in negotiations whereby unconnected issues might be linked, and thus used as a delaying and escalation tactic. Several negotiators had been caught out by this tactic being used against them and were now wary of it.
7. Response options
The research also found that there are only four possible responses to a proposal, whether in a negotiation or not. They are accept, reject, counter-propose or ignore. This theory was originated by Brian Leapman (Leapman, 2003). It was not found in the extant literature on negotiation.
8. Contracts - The ‘sweeper’ clause
A finding from three actors was the ‘sweeper clause,’ which is a device for closing down opportunities for changes (uncontrolled by the buyer) deliberately introduced to a contract in order to generate additional revenues for the seller.
9. Questionnaire 2 - Negotiator perception preferences
The dominant preferences identified in the previous chapter (see Figure 4.8 on p.122) showed that of a total of 200 votes available to the actors for either collaborative or competitive choices, there was a predominant preference of 148 against 52 for collaborative approaches from the sample. The researcher was surprised by this finding, as it was not what the interviews had indicated was likely to be the outcome, particularly everything that had been stated about ‘partnership sourcing’, indicating that the negotiators who believe that collaborative approaches can and do work in practice was a small minority. There may be a number of explanations for this:
a) The discrepancies may be explained by reading precisely what each respondent said in reply to the interview question, in that few of the replies were a clear cut affirmative or negative, but reflected the negotiators’ perceptions of the matter as they were able to articulate them. These did not necessarily easily fit into a yes/no tick box categorisation. A good example of this would be Actor 3’s reply, indicating that he believed that whether a negotiation approach is adversarial or collaborative is entirely how it is presented to the other party. He maintained that the approach should be dressed-up as win-win, but is really win-perceived win.
b) Most of the questionnaire responses were slow in being returned by the actors, and, although a 100% response was eventually received, this required considerable expediting by the researcher. This may mean that the questionnaire was perceived as ‘a stage too far’ in imposing on the busy schedules of the actors. Many may have been completed hurriedly to get them out of the way with less contemplation of the options presented than during the interviews, and little consideration of how their questionnaire responses supported or aligned with what the actors had said in their interviews, which in several cases had been many weeks prior to completion of the questionnaires. This is known as ‘response bias’, and it applies to all forms of data collection (Campbell and Stanley, 1963). However, questionnaires also suffer from what is known as ‘instrument bias’ Campbell and Stanley op. cit., as in this case where only two respondents asked for clarification of some of the questionnaire questions, the rest just responded in what may have been a careless manner due to time pressure. A third bias, ‘measurement history bias’ Campbell and Stanley op. cit., exists in questionnaires, in that if the respondents were sent the questionnaire a second time, the chances are they will answer some of the questions a bit differently. In this second questionnaire instrument, which originated from Murray’s (1986) study, it became apparent that the list of pairs of variables contains some options which are laden with bias. Following in Figure 5.7 are the options that scored so low in terms of responses that they raise questions about their viability.
On reviewing these low scoring responses yielded from the study, some of the variables appear so biased as to be untenable or at least unreasonable options, which may have steered the respondents towards the other, more reasonable, option. Unfortunately, this did not become apparent until the questionnaire responses were analysed.
10. Detached observer
In very large negotiations between large negotiation teams it is advantageous to deploy an observer, with no responsibilities to participate in the negotiation, to do no more than observe closely the behaviours and particularly the reactions of the other team’s negotiators for clues to their thinking and motivations that contradict what they say.
11. Language obfuscation
The questions concerning integrative and distributive approaches to negotiation and zero sum and non-zero sum negotiation outcomes irritated the actors to varying degrees. The effect of obfuscation is to mystify the subject leaving the recipient baffled and bewildered. Where the obfuscating language has been created by academics, writing in the emerging field of knowledge of negotiations between buyers and sellers, it has had the effect of creating and preserving a gap between practitioners and academics. Within the scope of this thesis there are a number of terms that have been coined by academics over the years. These terms have not helped by bringing clarity to debate but have the reverse effect: of obscuring any clarity of expression and introducing mud into the clear water. This appears to be a deliberate intent on the part of academia, designed to avoid useful debate or indeed any contact between the academic and practitioner communities. The following terms have added no value to useful debate, are largely unknown to practitioners, and in the researcher’s opinion should not be used because they subtract value:
1. ‘integrative’ meaning collaborative
2. ‘distributive’ meaning adversarial
3. ‘business exchange’ and ‘buyer and supplier exchange’ meaning a purchase (or sale)
4. ‘positive sum outcome’ meaning a ‘win-win’ outcome
5. ‘negative sum outcome’ meaning ‘lose-lose’ outcome
6. ‘zero sum outcome’ meaning a ‘win-lose’ outcome
7. ‘non-zero sum outcome’ meaning a ‘win-partial win’, or ‘partial win-partial win’ outcome.
8. ‘dyad’ meaning two units regarded as a pair.
Figure 5.7: Non-preferred Negotiation Preferences from Questionnaire 2
[pic]
9. ‘countervail’ meaning counter balance, or of equal and opposite force. Counterbalancing might be a more commonly used equivalent word, but that would not convey the implication that countervailing means acting against an often detrimental influence or power. This word is almost inextricably linked with power and rarely seen in any other context.
32. Summary – Negotiation principles
From the findings of the field research, a number of separate factors came together to form the constituent elements of a new perspective of negotiation. These include: some of the traditional persuasion techniques combined with the response options available in a negotiation, the personal traits or behaviours which individual negotiators display when involved in negotiation interactions, the preferences and aversions of negotiators in terms of opposing negotiators and how they relate to them, and the motivational characteristics of those negotiators who place their own personal needs above those for whom they are meant to be negotiating. These have been combined into an integrated suite of variables, all of which have an impact on buyer-seller negotiations, grouped together as principles of negotiation. Thus the contribution to knowledge of this work is the synthesis of the following negotiation principles:
1. Most negotiations are adversarial in nature; collaborative negotiations happen rarely and only in special circumstances.
2. Whilst sellers frequently talk about ‘partnerships’, ‘special relationships’ and ‘win-win’, buyers treat negotiations as adversarial unless there is a formal partnership or joint venture between buying and selling organisations.
3. It is clear that the use of power by coercion takes precedence in any negotiation where either negotiator is in a position of power and able to exploit it. Each negotiation is a test of the balance of power between the two parties.
4. The buyer has the power over the seller in a negotiation up to the point when a contract is signed especially where competitive sourcing is used. From the point of contract signature the power shifts to the seller, especially if there are subsequent changes to the contract that were not in scope from the outset.
5. Female negotiators often hold more power in negotiations over males because men do not feel that they are giving in when making concessions to a female negotiator.
6. Each negotiation is a test of the ‘interpersonal chemistry’ between the negotiators, in particular how each party perceives the other, in relation to trust, integrity and like or dislike.
7. Integrity is perceived by negotiators at two different levels, a higher, almost superficial level, in which lying and deceit are commonplace, and a deeper, more fundamental level, which negotiators regard as of critical importance. When a negotiator believes that this fundamental level of integrity has been violated by the other negotiator, then there is little chance that a mutually satisfactory outcome may subsequently be achieved.
8. Negotiators use the five established persuasion techniques, logical argument, coercion, bargaining, emotion and middle ground compromise. In addition they commonly use promises and gaining an understanding of the true motivations of the other party.
9. Buying negotiators try to understand the personal motivations of the selling negotiator, as these may be at variance from what might be the expected motivations of the selling organisation. By exposing the components of the motivational package of the selling negotiator, the buying negotiator may identify components of a deal that fall outside of the selling negotiator’s package, and which are therefore likely to be less contested than components which form part of it.
This chapter has reviewed the findings of the field research and evaluated them in the light of both the extant literature that was discovered from the literature review in chapter 2 and the research aims and objectives. The next chapter presents the conclusions drawn from the answers to the research questions, assesses the contribution to knowledge and practice of the research, and suggests recommendations for future research in the subject area of negotiations between buyers and sellers.
CHAPTER 6: CONCLUSIONS
6. Introduction, chapter overview, aims and objectives
The specific objectives of this chapter are to:
• Present the conclusions from this research in the form of responses to the research questions outlined in Chapter 1.
• Present the contribution to knowledge and practice of this research.
• Outline the importance of this research
• Outline plans for dissemination of the new knowledge
• Identify the limitations of this research.
• Recommend areas for future research into major negotiations between buyers and sellers.
33. Conclusions
1. Neglect of negotiation as a subject
The subject of negotiation between buyers and sellers has been neglected, overlooked and underestimated for as long as procurement has been emerging as a recognisable function of business. Ramsay (2007) challenged the neglect of negotiation by the academic community in the field of purchasing and supply management and found it difficult to comprehend. This research has found that the senior buying and selling executives who practice negotiation in high level business to business deals consider what they do as critically important to their businesses. The tools and techniques they use, and the depth of their knowledge of their subject cannot be described as basic. Yet the academic literature has chosen to ignore negotiation between buyers and sellers as a field worthy of research and continues to do so.
2. Responses to the research questions
The thesis has filled the gaps in the extant knowledge on negotiations between buyers and sellers, and answered the research questions as follows:
3. Integrative negotiations
The research discovered that ‘integrative’ negotiations do not happen between buyers and sellers in the normal course of buyer-seller negotiations. There was no consensus among practicing negotiators that integrative, collaborative negotiation is the prevailing approach used, and indeed the consensus was that ‘integrative’ negotiations are not used at all. The nature of collaborative negotiations, such as they do take place, is limited to those special circumstances where formal partnership or collaborative ventures exist between buying and selling organisations. These responses to the research questions led to the formulation of the first and second negotiation principles, namely:
1. most negotiations are adversarial in nature; collaborative negotiations happen rarely and only in special circumstances.
2. whilst sellers frequently talk about ‘partnerships’, ‘special relationships’ and ‘win-win’, buyers treat negotiations as adversarial unless there is a formal partnership or joint venture between buying and selling organisations.
These are new findings, and it is surprising to discover these principles, given that the conventional wisdom is that integrative, collaborative negotiation has emerged as the prevailing approach used according to much of the academic literature over the past 25 years.
4. Power
The research discovered that power is used in buyer-seller negotiations often, and the initial encounter in a negotiation, following the establishing of a rapport, is a test of the power balance between the organisations. This may itself determine the outcome, and the party with more power will dictate terms to the one with less power. If the test of the power balance does not lead to a deal being struck, then the negotiation will move on. Porter’s ‘five forces of competition’ model is not used by any of the negotiators who took part in the study. The actors believe that the seller has more power than the seller up to the point of the signature of the contract. The actors believe that power originates from seven sources, power of the buyer over the seller; power of the seller over the buyer; personal power of the individual; power of superior knowledge or preparation; power of the stakeholder; power caused by dependency; and finally, if both parties believe that one of them holds a more powerful position then that party is more powerful. The research also found that negotiators will always use power against the other party when they have it, but strongly resent power being used against them when they find themselves in a less powerful position. A minority of five of the actors had heard of the BATNA, and only three of them believed that a real BATNA often exists in negotiations. Two of these believe that it is the buying negotiator’s responsibility to create a credible and convincing alternative, as a ploy. The research found that females often have more power than males when negotiating with another male.
These responses to the research questions led to the development of the third, fourth and fifth negotiation principles, namely:
3. it is clear that the use of power by coercion takes precedence in any negotiation where either negotiator is in a position of power and able to exploit it. Each negotiation is a test of the balance of power between the two parties.
4. the buyer has the power over the seller in a negotiation up to the point when a contract is signed especially where competitive sourcing is used. From the point of contract signature the power shifts to the seller, especially if there are subsequent changes to the contract that were not in scope from the outset.
5. female negotiators often hold more power in negotiations over males because men do not feel that they are giving in when making concessions to a female negotiator.
These are new findings. It is surprising that no previous research had identified the strong propensity of negotiators to conduct a trial of the power balance between the parties in the early stages of a negotiation, and that, given they find themselves in the position of power over the other party, they will not hesitate to use it to their advantage. It is also surprising to discover that female negotiators are often in positions of power over their male counterparts, when the conventional wisdom from the extant literature indicated that the reverse was true.
5. Interpersonal chemistry
The research identified that interpersonal chemistry is critically important to negotiators, and frequently influences the negotiation outcome. This is not emotional intelligence, or the individual characteristics of one of the negotiators, but the chemistry of how they interact together in the negotiation. This is often established very early when the negotiators meet or come into contact initially. If they establish a good rapport, then things are likely to go well. If not, then the reverse is the case, and achieving a mutually acceptable agreement is unlikely. This finding from the research led to the sixth principle of negotiation:
6. Each negotiation is a test of the ‘interpersonal chemistry’ between the negotiators, in particular how each party perceives the other, in relation to trust, integrity and like or dislike.
This represents new knowledge. Previous research has identified emotional intelligence and other individual characteristics as influences over negotiation outcomes, but it has not previously been understood that the interaction between the negotiators held such an important influence over the negotiation outcome.
6. Integrity and deceit
The research identified that negotiators perceive integrity and deceit as critically important to them, and they frequently influence negotiation outcomes. Furthermore, it identified that negotiators perceive integrity on two levels, firstly, an almost superficial level, in which all negotiators expect that lying and deceit are commonplace and to be expected in negotiations, and secondly, a deeper and more fundamental integrity which is of greater concern. This discovery followed the initial uncovering of a confusing array of ‘mixed messages’ around integrity and deceit, which seemed contradictory. All negotiators deliberately deceive their opponents in negotiations to an extent, and expect their opponents to lie to them. However, if a negotiator feels that the fundamental integrity of the other party is in question then this will have an important influence on the likely outcome. This finding from the research led to the seventh principle of negotiation,
7. Integrity is perceived by negotiators at two different levels, a higher, almost superficial level, in which lying and deceit are commonplace, and a deeper, more fundamental level, which negotiators regard as of critical importance. When a negotiator believes that this fundamental level of integrity has been violated by the other negotiator, then there is minimal chance that a mutually satisfactory outcome may subsequently be achieved.
This is a new finding in negotiations between buyers and sellers. The author is optimistic that future research will further investigate this phenomenon.
7. Persuasion techniques
The research found that buying and selling negotiators are less aware of the five traditional persuasion techniques than may be expected given that they have become established in the extant literature over more than three decades (Farrington, 1980, Steele et al., 1989), albeit in text books rather than the academic literature. There was a tendency among negotiators to adhere to their preferred negotiating technique, even when it clearly did not work. There was also a marked reluctance to use emotions among the actors who participated in this study. However, the research also identified that there are two additional persuasion techniques in common use by negotiators, not previously recognised among the traditional ones. These are promises, and also the technique of gaining an understanding of the genuine underlying motives and objectives of the other party. Promises are often made in negotiations, sometimes with the genuine intent of the promise being fulfilled, other times not. Many of these promises are outside of the scope of what finally becomes documented as the contract between the parties, and often this is intentional deliberate practice by the party making the promise. The technique of gaining an understanding of the genuine underlying objectives of the other party was found to be a favoured technique, much relied upon by some of the participants. These findings were incorporated into the eighth negotiation principle,
8. Negotiators use the five established persuasion techniques, logical argument, coercion, bargaining, emotion and middle ground compromise. In addition, they commonly use promises and gaining an understanding of the true motivations of the other party.
The finding of promises being made in negotiations is new. The finding that the technique of gaining an understanding of the genuine underlying objectives of the other party was a favoured technique is not new; it existed in the original source of the traditional five techniques, (Berrien, 1944) and its successor, (Brown et al., 1966), but was mysteriously lost from the subsequent literature on negotiations. It is surprising that this technique had been identified in the specific field of negotiations around peace settlement negotiations with hostile parties, but was not brought across into the literature on commercial negotiations between buyers and sellers.
8. Personal motivations
The research found that negotiators are often personally motivated by targets contrary to the expectations of negotiators of the other party. It is of critical importance for buying negotiators to discover the personal motivations, namely key elements of the remuneration package, identifying the specific target areas for individual bonuses, in order to take advantage of those elements that are not part of the personal motivators of the negotiator. This finding led to the ninth negotiation principle,
9. Buying negotiators attempt to understand the personal motivations of the selling negotiator, as these may be at variance from what might be the expected motivations of the selling organisation. By exposing the components of the motivational package of the selling negotiator, the buying negotiator may identify components of a deal that fall outside of the selling negotiator’s package, and which are therefore likely to be less contested than components which form part of it.
It is surprising that this level of investigation into the personal motivations of the negotiators of the other party is not identified in the extant literature. It is undoubtedly difficult to uncover this information and takes a considerable investment of time and resource of negotiators to obtain it. Often the only way to obtain such information is from the negotiator of the other party, by establishing a strong rapport, but it is possible, and can yield rich rewards.
9. Importance of bargaining
The literature review identified the importance of the word ‘if’, in the negotiator’s vocabulary, which has the effect of making every concession or proposal conditional on the receipt of something in return. This point about conditional offers was identified as an important principle in negotiation, though it was identified in a text book and not in the academic literature by Kennedy (1982). Kennedy (1982) made the point forcefully that he was hostile towards any unilateral conceding under any pretext whatsoever, or for any purpose. He kept reinforcing his point that bargaining, the heart of the negotiation process, is an exercise in exchange, where concessions are traded, never given away. This point has been missing from the academic literature since the publication of the text book in 1982, and is added here as a principle of negotiation:
10. Bargaining is an exchange process, in which concessions are traded between the negotiators. Negotiators never give away anything without receiving something in return, and always try to concede something of minimal value in exchange for something more valuable to themselves.
It is surprising that this principle, which has been emphasized by Kennedy countless times in many of his textbooks, has never passed into the academic literature, despite the fact that senior practitioners are aware of it and use it, having learned it from public training courses on negotiation. (It has been incorporated in the courses run by Huthwaite for many years.)
34. Other findings
1. Behaviours of successful negotiators vs average negotiators
The research has found that successful negotiators:
a) spend more time in detailed planning and preparation than average negotiators,
b) spend more time building rapport with the other party’s negotiators. They will often devote an entire initial meeting doing nothing other than building the relationship with the other negotiators,
c) treat the other party with respect,
d) maintain focus on the end-game at all times and relentlessly pursue achievement of it,
e) use power to full advantage if it is available to them,
f) remain flexible in the persuasion techniques they employ, switching from one to another in order to gain concessions, and if one technique is not working,
g) understand the genuine goals and objectives of the other party.
Thus it can be seen that there are significant differences between successful and average negotiators.
2. Importance of preparation to successful negotiators?
The research has found that preparation and planning is critically important to successful negotiators. By thorough planning and preparation, successful negotiators understand in detail all of the important issues. By understanding the issues more effectively than the other party, they control those issues, and are best positioned to win each point in turn.
The research has highlighted that the way in which negotiators prepare and plan for negotiations varies significantly. Negotiators in buyer seller relationships are likely to have prepared by studying the subject matter to be negotiated, and the respective positions of the two potential trading organisations, but are less likely to have studied the individual negotiators they will encounter across the table, their issues or their interests. Anticipating these other elements can give them a major advantage.
3. Importance of contracts between buyers and sellers?
The research has found that despite there existing much rhetoric about contracts being largely unnecessary, the reality today is that large organisations conduct almost all of their business in formal legal contracts. All of the actors confirmed this except for one, who singled out the large supermarket chains, which did not use contracts when dealing with small suppliers. Mainstream procurement staff would not contemplate any other way of doing business, because they are employed to minimize risk.
4. Four response options
There are only four possible responses to a proposal: accept, reject, counter-propose or ignore. This is an existing theory evolved by Leapman (2003) as his Universal Request/Response Negotiation Pattern, part of his Universal Process Architecture. It was not found in the literature, but put forward to the researcher by Leapman at the presentation of initial findings to the CIPS Beds and Herts Branch on 7th July 2009.
35. Contributions to knowledge and practice
This research makes a number of contributions to the extant knowledge on negotiations between buyers and sellers, primarily through the negotiation principles synthesised from the findings via the discussion. These principles are aligned to what the actors say they do as they approach negotiations in their day-to-day business. The contribution to practice is to bring an enhanced understanding to the practice of negotiation via the negotiation principles, which may be used as a checklist, once disseminated to practitioners.
36. Importance of this research
This research is important because negotiations between buyers and sellers has been neglected in the purchasing and supply management (p&sm) field for over four decades since Chester Karrass completed his doctoral research in 1968. It is also important because it is the first research to bring empirical data from practising negotiators into the body of knowledge on the subject. A study on negotiation in buyer seller relationships was produced by Harwood in 2003 in the field of marketing. However, this study focused on the various relational development stages of Key Account Management (KAM) and its findings are confined within that limited context. A strength of this work is that the research was conducted with practitioners who were prepared to talk openly to the researcher about how they actually go about negotiations, and how they feel about what works and what doesn’t work in practice, and also how they feel about the people they have negotiated with. Rather than many of the research studies conducted on negotiation previously, which have been conducted using either simulated negotiations to try to model or predict what happens in negotiation situations, for example, Karrass (1968). This research is supported by empirical evidence from professional negotiators at the highest level in procurement and sales.
37. Implications of findings for practitioners
This research has discovered several new findings not previously known or contained within the extant literature on the topic. There is a significant gap in the academic literature between the conventional wisdom and the reality in practice revealed by this work. These are all contained within the negotiation principles. Following dissemination of this new knowledge, the principles should be of value to practitioners by giving them a checklist of options that they will almost certainly never have considered before, to assist in preparation prior to engaging in a negotiation, and to use during the negotiation.
38. Dissemination of new knowledge
The new knowledge is intended to be disseminated to three separate populations, the academic community, the practitioner community connected in some way to CIPS, and the practitioner community unconnected to CIPS. The contribution to knowledge will be disseminated to the academic community by submitting a paper summarising the findings to the academic journal ‘Journal of Purchasing and Supply Management’ and following peer review, will be amended if necessary according to the demands of the reviewers, in order to meet the criteria for publication, and achieve publication. The contribution to knowledge and practice will be consolidated by submitting a practitioner article distilled down from the academic paper mentioned above, using non-academic language, to ‘Supply Management’, the journal of the Chartered Institute of Purchasing and Supply. This will be reinforced by submitting proposed additions and amendments to the syllabus on effective negotiation of CIPS, either at its current Level 4 or higher. It is recognised that not all practising buying negotiators are members of CIPS, and therefore the contribution to practice will be consolidated by submitting non academic articles to other journals such as ‘CPO Agenda’ and ‘Negotiation Journal’.
39. Research limitations
The research was conducted using a robust research design and utilised three separate phases in order to obtain triangulation and feedback on the initial findings, in order to add to the reliability and validity of the results. However, some limitations will still exist in all research projects and the author recognises that this study is no exception.
1. Sample size
While having high internal validity, the research sample of 20 is relatively small, although the actors took place in detailed interviews. Furthermore, as with all qualitative research, each actor brings his or her own bias to the research based on their own perception of the negotiations that stand out to them as memorable for whatever reason.
2. Sample of convenience
The sample of senior negotiators was a sample of convenience selected from contacts in CIPS who hold senior management positions in large organisations. They were all available for interview in London.
3. Questionnaire format
The questionnaire format, although used in previous research studies, is not free from bias. The list of 34 negotiator characteristics in the questionnaire first used by Karrass (1968) is not fully comprehensive in that other characteristics were identified by the actors in the interview phase as being of high importance to them. Moreover, the second questionnaire, originating from Murray’s (1986) study listed of pairs of variables, contains options which are laden with bias. On reviewing the responses yielded from the study some of the variables appear so biased as to be untenable or at least unreasonable options, which seem to have steered the respondents towards the other more reasonable alternative. The bias identified in these statements is discussed in the previous chapter.
4. Geographic scope
The sample of senior negotiators was confined to the UK, in order to minimise costs and access difficulties. However, the negotiators were not confined to negotiations in the UK, and were mostly negotiating in global markets.
5. Responses to Questionnaires
A further limitation is that the participants were not pre-warned when they were first contacted about the request for them to complete a questionnaire after they had completed the interview. This led to some of the participants needing to be followed up to the point of harassment in order to get them to fully complete and return the questionnaires. The further implication of this is that whilst all of the participants had been willing to be interviewed, their participation in the questionnaire was less enthusiastic, and may well have been completed hurriedly, with less consideration of the questions than in the interviews. This undoubtedly had an impact on the validity of the results and to an extent negated their value for triangulation purposes.
6. Exploratory interviews
A fourth limitation is that the exploratory interviews with CIPS and Huthwaite were not as valuable as they may have been, had they been conducted after, rather than prior to the core interviews. Several issues regarding the lack of perceived benefit of CIPS by the senior procurement negotiators could have been addressed, but this was not possible.
40. Recommendations for future research
1. Negotiations in different circumstances
The principles of negotiation were derived from a sample group of 20 experienced buyers and sellers across a broad cross section of industry sectors. However, this study only looked at commercial negotiations between buyers and sellers. It may be that these principles could be found to apply to a greater or lesser extent in negotiations conducted by less experienced negotiators, or conducted in particular industry or market sectors, or in commercial negotiations not between buyers and sellers. Thus future research could refine the understanding of how, and in what particular circumstances these principles of negotiation apply. It could also refine the understanding of some particular circumstances in buyer-seller negotiations where one or more of these principles do not apply.
2. Personality types
In view of the importance of personality traits and characteristics and their behaviours to negotiation outcomes identified in this research, it is recommended that further research be conducted to investigate any correlation between personality types and behaviours with negotiator characteristics or preferences, in negotiations between buyers and sellers. For example, a study could be conducted to discover whether particular Myers Briggs personality types have any corresponding negotiator traits or characteristics.
3. Investigate the relationship between power and negotiation
The use of power via coercion or explicit threats is one of the five persuasion techniques of negotiation established in the literature. However, one of the major questions raised by this work is whether power is more than just a sub-set of negotiation. Is it an over-arching phenomenon that may determine the outcome of a negotiation almost regardless of the skills of the negotiators and the strategies, tactics and techniques that they employ? There is a potential research project here to discover how power and negotiation interact together in the real negotiation environment. One aspect of this would be to establish the relationship between different aspects of power and the other options open to negotiators. Further research into the use of power in buyer-seller relationships, beyond the conceptual framework developed by Meehan (2007) could investigate the process whereby buyers and sellers determine what power they have available to them and how they utilise it, vis a vis other persuasion techniques.
4. Develop a tool for the selection of negotiators
There is potential to investigate further the behavioural traits shown in Figures 4.6 and 4.7 and develop these into a Belbin (1981) or Myers-Briggs (Myers, 1952) type of selection tool to assess the traits of individuals most suitable to become skilled negotiators. These traits are not, for the most part, teachable skills as they would require extensive behaviour modification. It may be more expedient, therefore, to select candidates for jobs involving negotiation based on their aptitude in relation to those traits and characteristics rather than trying to teach them the required skills.
5. Quantitative study
The methodology selected for this study was qualitative. It may be that a study adopting a quantitative methodology could have reached different findings and conclusions.
41. Summary
This is the first academically rigorous research undertaken investigating the relationship into negotiations between buyers and sellers conducted in the purchasing and supply management field for over four decades. The neglect of research in this field has led to a body of literature and also a syllabus structure in the leading professional body in the field, that is outdated and irrelevant. This is because lessons such as the importance of bargaining and the conditional nature of all offers in true negotiation, were lost and remained missing from the extant body of knowledge. Over the same period inappropriate theories have been imported from other fields into the literature unchallenged, and unsupported by empirical research, such as the conventional wisdom that there are two approaches to negotiation, collaborative and adversarial, that collaborative negotiations are mutually beneficial to buyers and sellers, and that collaborative negotiations have become the predominant approach to negotiations between buyers and sellers.
This research has produced findings that re-establish some important elements of negotiation, increase the emphasis on some that were understated in the literature, and introduce new ones that were not previously identified. The findings have been synthesised into a set of negotiating principles which make a genuine contribution to the knowledge on the subject, and should enable negotiating practitioners to enhance their skills and techniques, by consolidating for them lost and underemphasised elements in the literature, along with new techniques as used by leading negotiators in the field.
Table 6.0 GLOSSARY OF TERMS AND ACRONYMS
|ABC |Activity-based costing |
|ABM |Activity-based management |
|ACR |Arms-length Contractual Relationship – model developed by Sako (Sako, 1992) based on |
| |Williamson’s (1975) transaction cost economics model. (see also OCR) |
|ALCATEL PERIOD |The Alcatel Mandatory Standstill Period is a period of at least ten calendar days following |
| |the notification of an award decision in a contract tendered via the Official Journal of the|
| |European Union, before the contract is signed with the successful supplier(s). Its purpose |
| |is to allow unsuccessful bidders to challenge the decision before the contract is signed. It|
| |is named after a pair of linked European Court of Justice cases which are jointly known as |
| |the Alcatel case. Within the UK, it was introduced by the Office of Government Commerce in |
| |2005. |
|ANCHORING |[(Lax and Sebenius, 1986 P.134)] |
|APPROVED SUPPLIER |A supplier approved to supply goods or services to an organisation, often otherwise known as|
| |a Preferred Supplier, usually held on a Preferred Supplier List (PSL). |
|AQL |Acceptable quality level |
|ARMS-LENGTH |The arm's length principle (ALP) is the condition or the fact that the parties to a |
| |transaction are independent and on an equal footing. Such a transaction is known as an |
| |"arm's-length transaction". It is used specifically in contract law to arrange an equitable |
| |agreement that will stand up to legal scrutiny. |
|ASYMMETRIC INFORMATION |A situation where negotiators have different knowledge about the subject of the negotiation |
| |(i.e. one party has more knowledge than the other). This is most likely to occur in large |
| |and complex negotiations, such as mergers and acquisitions, and outsourcing contracts. In |
| |such cases, the seller usually has more complete information than the buyer. |
|ASYMMETRIC MUTUALITY |A situation where neither party to a negotiation has complete information, but their lack of|
| |information about the subject of the negotiation is roughly equal. |
|ATNA |Alternative To a Negotiated Agreement – not the best alternative, just an alternative. |
|AVIP |(Russill, 1997) Affirmative Vendor Improvement Programme. The supplier is made to feel ‘A |
| |Very Important Part’ of the customer’s business. See also Lopez: PICOS programme, possibly |
| |the largest and most successful practical application of such. (An element in Russill’s |
| |‘Organising for the planning performance’). |
|B2B |Business to Business |
|B2C |Business to Consumer |
|BA |Bidder Attributes |
|BAIT AND SWITCH |This is a common tactic in the sales of consulting services. The bait is normally the ‘A |
| |team’ that demonstrates its expertise during the selling phase. Once the contract is signed,|
| |the actual team that will conduct the work arrives, and to the astonishment of the customer,|
| |no-one from the ‘A team’ is present. Instead there are lots of raw graduate recruits on |
| |their first work assignment. The way to counter this ploy is to incorporate named ‘key |
| |personnel’ in the team that will do the work, with remedies for those key personnel not |
| |being available. |
|BARGAINING MIX |The package of issues for negotiation (Lewicki et al., 2006) |
|BARGAINING RANGE |Also sometimes known as the ‘Settlement Range’ or ZOPA. |
|BATNA |Best Alternative to a Negotiated Agreement |
|BATNEEC |Best Alternative Technology Not Entailing Excessive Cost |
|BCN |Back-Channel Negotiations - officially sanctioned negotiations conducted in secret between |
| |the parties to a dispute. These extraordinary negotiations operate in parallel with, or |
| |replace, acknowledged front channels of negotiation. |
|BDR |Behavioural Decision Research |
|B/E |Bill of Exchange |
|BFO |Best and Final Offer |
|BILATERAL OLIGOPOLY |A market with the combination of a few sellers (oligopoly) and a few buyers (oligopsony) is |
| |a bilateral oligopoly. |
|BLOCKER |Defined by Miller and Heiman (Miller et al., 1985) as a person within a buying organisation |
| |who prevents access to the Economic Decision Maker. |
|B/N |(Russill, 1997) Bid versus Negotiate Matrix. (An element in Russill’s ‘Organising for the |
| |planning performance’). |
|BOGEY |Term invented by Chester Karrass. Alternatively known as the ‘Mother Hubbard’. The tactic is|
| |to approach the seller with "I love your product but have only so much money". The |
| |salesperson tends to respond in a positive, friendly fashion. How can you be hostile towards|
| |someone who likes you and your product? The salesperson gets involved with the buyer and the|
| |budget problem. All that remains between them and a closed sale is a little problem-solving.|
| |This permits the negotiation to move away from a competitive affair to one of co-operation. |
| |The term has developed to mean a tactic where the negotiator pretends that an issue is of |
| |little or no importance rather than admitting it is quite important to him, the idea being |
| |to deflect attention from its importance ((Lewicki et al., 2006). |
|BOGOF |Buy One Get One Free – A standard offer in most major supermarket chains, and one which |
| |traditionally has been funded by the supplier, at the insistence of the customer. |
|BOM |Bill of Material |
|BOULWARISM |Strategy named after Lemuel Boulware, former vice-president of the General Electric Company,|
| |who rarely made concessions in wage negotiations; he started with what he deemed to be a |
| |fair opening offer and held firm. This is commonly referred to as Boulwarism (Raiffa, 1982).|
|BRA |Commonly referred to as the MFP or Most Favourable Position (Michael Hartley-Brewer) |
|BREAK POINT |The point at which parties would prefer to break off negotiations rather than settle beyond |
| |it (Kennedy et al., 1980 p.15) |
|BUSINESS-TO-BUSINESS (B2B) |Is a marketing strategy which involves the transaction of goods or services between |
| |businesses (as opposed to relations between businesses and other groups, for example |
| |consumers or public administration) |
|BUSINESS-TO-CONSUMER (B2C) |Also business-to-customer, describes activities of commercial organisations serving the end |
| |consumer with products and/or services |
|BUYER DOMINANCE |Cox |
|BUYER’S REMORSE |Is an emotional condition whereby a person feels regret after making a purchase (usually of |
| |a higher value item). The common condition is brought on by an internal sense of doubt that |
| |the correct decision has been made. This is exacerbated by the fear that one may have acted |
| |without full and complete information. Sometimes known as the Winner’s Curse. |
|CA |Competitive Advantage Matrix (Russill, 1997; an element in Russill’s ‘Organising for the |
| |planning performance’). |
|CALL-GIRL PRINCIPLE |“There is a rule of economic life that every seller should remember. The call-girl principle|
| |states that the value of services is greater before they are rendered than after. Plumbers |
| |know that the time to negotiate a price is when the basement is full of water.” Chester |
| |Karrass (1974) |
|CAPTIVE BUYER |See BENSAOU 1999 |
|CAPTIVE SUPPLIER | |
|CARTEL |A group of formally independent producers whose goal is to increase their collective profits|
| |by means of price fixing, limiting supply, or other restrictive practices. Cartels typically|
| |control selling prices, but some are organised to control the prices of purchased inputs. |
|CAVEAT EMPTOR |‘Let the buyer beware’ – a notion enshrined in English Law for centuries until The Sale of |
| |Goods Act offered the buyer some protection. |
|CCR |Capital Cost Rate |
|CDT |Contract Decision Tree (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|CENTRALISED PURCHASING FUNCTION |Centralised purchasing is a model where all purchasing is conducted through a single central|
| |organisation. While fully leveraging an organisation’s total spend, standardising processes |
| |and sharing best practice, centralised purchasing has the disadvantage of losing local |
| |supply market and consumption patterns. The risk of maverick buying also increases when |
| |local supply managers do not fully agree with the centrally taken decisions that impact |
| |local supply, quality or reaction time. |
|CENTRE LED ACTION NETWORK |See CLAN |
|CENTRE LED PURCHASING FUNCTION |In a centre led purchasing function, a centre of excellence focuses on corporate purchasing |
| |strategy, strategic commodities, best practices and knowledge sharing while leaving |
| |individual purchases and tactical execution to the business units. Theoretically, the model |
| |has all the advantages of centralised and decentralised models with minimal disadvantages. |
| |The centre led model is based on cross-functional teams that represent all key business |
| |units, it allows the creation of flexible supply chain processes and commodity strategies. |
|CFR |Cost and Freight – (Incoterm) |
|CIF |Cost, Insurance and Freight – (Incoterm) |
|CIP |Carriage and Insurance Paid – (Incoterm) |
|CIPS |Chartered Institute of Purchasing and Supply |
|CLAIMING VALUE STRATEGIES |Distributive, win-lose, or adversarial negotiation strategies. |
|CLAN - CENTRE LED ACTION NETWORK |Devised by Dr Dick Russill in the early 1990s, this was a model for centre-led procurement |
| |networks operating alongside users and stakeholders in the business (Russill, 1991, p.32-33)|
|CLOSING |Defined by Rackham as ‘A behaviour used by the seller which implies or invites a commitment,|
| |so that the buyer’s next statement accepts or denies commitment’ (Rackham, 1995 p.154) |
|CM |Cost Modelling (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|COGNITIVE DISSONANCE |A psychological state that describes the uncomfortable feeling when a person begins to |
| |understand that something the person believes to be true is, in fact, not true. The term |
| |describes conflicting thoughts or beliefs (cognitions) that occur at the same time, or when |
| |engaged in behaviours that conflict with one's beliefs. In academic literature, the term |
| |refers to attempts to reduce the discomfort of conflicting thoughts, by performing actions |
| |that are opposite to one's beliefs. |
|COGNITIVE POWER RESOURCES | |
|COM |Commitment Process (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|CONFLICT |A clash of interests, values, actions or directions. Conflict refers to the existence of |
| |that clash. The word conflict is applicable from the instant that the clash occurs. (de |
| |Bono, 1985 p.5) |
|CONFLICTION |A new word invented by Edward de Bono, meaning the process of setting up, promoting, |
| |encouraging or designing conflict. It covers all those deliberate things which happen before|
| |the conflict is established (de Bono, 1985 p.5). See also De-confliction. |
|CONTINGENT CONTRACT |A contract which contemplates several variable outcomes and provides different alternatives |
| |for the actual outcome that materialises (Bazerman and Gillespie, 1999). |
|CPA |Contract Price Adjustment |
|CPT |Carriage Paid To (Incoterm) |
|CREATING VALUE STRATEGIES |Integrative, win-win, or collaborative negotiation strategies. |
|CRIT |Evaluation Criteria (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|CRM |Customer Relationship Management |
|CUSTOMER PREFERENCING |Specific targeting of potential customers over others, based on the ROI return on the cost |
| |of sale. |
|DCF |Discounted Cash Flow (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|DDP |Delivered Duty Paid (Incoterm) |
|DDU |Delivered Duty Unpaid (Incoterm) |
|DeB |Debrief of Unsuccessful Suppliers (Russill, 1997; an element in Russill’s ‘Organising for |
| |the planning performance’). |
|DE-CONFLICTION |A new word invented by Edward de Bono, meaning the opposite of ‘confliction’. It refers to |
| |the designing away or dissipation of the basis for the conflict. De-confliction does not |
| |refer to negotiation or bargaining or even to the resolution of conflicts. De-confliction is|
| |the effort required to evaporate a conflict (de Bono, 1985 p.5). |
|DECENTRALISED PURCHASING FUNCTION |In the traditional decentralised organisational model for purchasing, each business, |
| |function or geographic unit within a corporation is responsible for its own purchases. By |
| |providing business units with autonomy and control over their own processes it often |
| |improves the overall satisfaction with the purchasing function. However, the decentralised |
| |model does not allow corporations to leverage the corporate spend or align BU objectives |
| |with the overall objectives for the corporation. With little of no coordination, best |
| |practice, templates and strategic know-how are unevenly distributed throughout the |
| |organisation. Operating costs are often high. |
|DECISION MAKER |Defined by Miller and Heiman (Miller et al., 1985) as the Economic Buyer or Economic Buying |
| |Influence, being the one Decision Maker who has the power to give final approval to a |
| |purchase |
|DEQ |Delivered Ex Quay (Incoterm) |
|DES |Delivered Ex Ship (Incoterm) |
|DUAL SOURCE |The purchasing practice of buying an item from two separate suppliers, dividing the business|
| |between them. |
|DYAD |Academic term from the Greek word for ‘two’, meaning a group of two, usually referring to |
| |negotiations between two parties. |
|E |Evaluation of Offers (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|EBI |Early Buyer Involvement |
|ESI |Early Supplier Involvement |
|eMARKETPLACE |Virtual area that enables companies/individuals to offer their goods or services for sale |
| |Also enables people to purchase goods or services electronically |
|ePROCUREMENT |Ability to purchase/sell through electronic trading via the Internet |
|ECONOMIC BUYER (ECONOMIC BUYING |Defined by Miller and Heiman (Miller et al., 1985) as the one Decision Maker who has the |
|INFLUENCE) |power to give final approval to a purchase |
|ENDOWMENT EFFECT |The phenomenon that people demand more money to give up an object then they are willing to |
| |pay to buy the same object. |
|ESCALATION |The use of progressively heavier contentious tactics - Smyth |
|ESCALATION |Nine stages of escalation by Glasl |
|ESCROW |A legal arrangement in which an asset (often money, but sometimes other property such as a |
| |deed of title, a website, or software source code) is delivered to a third party (called an |
| |escrow agent) to be held in trust pending a contingency or the fulfilment of a condition or |
| |conditions in a contract such as payment (usually called a trigger event). Upon the event |
| |occurring, the escrow agent will deliver the asset to the proper recipient, otherwise the |
| |escrow agent is bound by his or her fiduciary duty to maintain the escrow account (source: |
| |Wikipedia). |
|EXCHANGE |Academic term used to describe transaction representing a sale to the seller and a purchase |
| |to the buyer; the exchange of goods or services for money. |
|EXPLODING OFFER |A particular form of ultimatum in which one party presents the other with a no-win offer |
| |that has a deadline attached to it forcing the other party to decide on a |
| |less-than-attractive offer or run the risk of going without anything (Robinson, 1995). Such |
| |offers have several other components, including: |
| |A clear asymmetry of power between the parties |
| |A pressure-inducing test of faith for the receiver |
| |A restricted set of options |
| |A lack of consideration and respect for the offeror by the respondent |
| |An apparent lack of good faith on the offeror’s part (Robinson, 1995 p.278-279) |
|EXW |Ex Works (Incoterm) |
|FACILITATION PAYMENTS |Bribes; A facilitation payment is typically the payment of a small amount to a government |
| |official to secure or expedite a routine governmental action, often to avoid bureaucratic |
| |delays or inaction if payment is not made. In most countries such payments are illegal but |
| |in some, particularly developing countries, they are commonplace and often accepted as a |
| |necessary supplement to the low incomes of junior officials, and may be part of an organised|
| |system with a percentage going to superiors. How a global company deals with this issue is |
| |not helped by the fact that OECD countries have taken differing approaches in their |
| |legislation on bribery of foreign officials. For example, the US specifically excludes |
| |facilitation payments from its definition of bribery but the UK, the Netherlands and Japan |
| |makes no distinction, although in their initial guidance they indicated that they were |
| |unlikely to prosecute companies for making small payments in countries where the practice is|
| |common-place. Most major companies explicitly forbid such payments but some accept that |
| |employees may need to make such payments, subject to certain conditions such as an |
| |obligation to report all such payments to the company’s compliance unit and often only make |
| |them with approval from the company’s lawyers. (Source: The Woolf Committee Report into BAE |
| |Systems plc, 6th May 2008). |
|FARPOINT GAMBIT |A tactic designed as a counter to an ‘exploding offer’. (Robinson, 1995) |
|FAS |Free Alongside Ship (Incoterm) |
|FBP |Fall Back Position |
|FCA |Free Carrier (Incoterm) |
|FINAL OFFER ARBITRATION |Under final offer arbitration, if negotiators do not reach an agreement, they must submit a |
| |"final offer" to the arbitrator. Rather than compromising, the arbitrator must choose the |
| |final offer of one of the parties. |
|FOB |Free On Board (Incoterm) |
|FOTE |Full, Open, Truthful Exchange (Raiffa, 1982). |
|FRACTIONATING |A method of issue control that involves dividing a large conflict into smaller parts |
| |((Fisher, 1964) |
|FRAMING |According to (Neale and Bazerman, 1985), framing is a cognitive bias, The manner in which |
| |negotiators frame the options available in a dispute can have a significant impact on the |
| |process and outcome of negotiation. |
|FTS |Face Threat Sensitivity – Sensitivity to the threat of losing face, or self-esteem, |
| |particularly during negotiations. |
|FUD |Fear, Uncertainty and Doubt. Defined by Gene Amdahl after he left IBM to found his own |
| |company: “FUD is the fear, uncertainty, and doubt that IBM sales people instil in the minds |
| |of potential customers who might be considering [Amdahl] products.” The idea, of course, was|
| |to persuade them to go with safe IBM gear rather than with competitors' equipment. This |
| |implicit coercion was traditionally accomplished by promising that Good Things would happen |
| |to people who stuck with IBM, but Dark Shadows loomed over the future of competitors' |
| |equipment or software. After 1990 the term FUD was associated increasingly frequently with |
| |Microsoft, and has become generalized to refer to any kind of disinformation used as a |
| |competitive weapon. |
|GATEKEEPER |Defined by Miller and Heiman (Miller et al., 1985) as the Technical Decision Maker who has |
| |the power to give technical approval to a purchase. |
|GRIT |Graduated and Reciprocated Initiatives in Tension Reduction (Osgood, 1962) |
|GUANXI |The Chinese practice of valuing personal relationships and alliances. |
|HNP |Harvard Negotiation Project |
|HvS |Hard versus Soft Money (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|IBN |International Business Negotiator |
|IC |Interest Cycling (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|ICE |Interests, concerns and emotions. Source: Kathleen Kelly Reardon. |
|IMP |Industrial Marketing & Purchasing group – a group of writers on relationships based on |
| |Williamson’s (1975) transaction cost economics model, brought together in the work of |
| |Hakansson (1982), and supported by both Lamming and Cox. |
|IN TRADE e-HUB |Operated by Infobank, provides the backbone technology that enables large companies to |
| |introduce their own trading exchanges. It provides the infrastructure to support the |
| |development of an eCommerce market place. |
|IO |Interpersonal Orientation (Rubin and Brown, 1975) |
|IS |Ideal Settlement – another term for MFP. |
|ITT |Invitation to Tender |
|KAM |Key Account Management |
|KRALJIC (pronounced Kra-litch) | |
|KRALJIC MATRIX |Matrix devised by Pieter Kraljic and popularised by his landmark 1983 study (Kraljic, 1983) |
|LANCER |Linkage, Alignment, Needs, Control, Evaluation, and Reading. |
|LATERAL THINKING |A term invented by Edward de Bone defined as ‘the ability to escape from existing perceptual|
| |and conceptual patterns in order to open up new ways of looking at things and doing things.’|
|LCCS |Low-Cost Country Sourcing |
|LEWICKI (pronounced Lev-itski) | |
|LIEN |A lien is a form of security interest granted over an item of property to secure the payment|
| |of a debt or the performance of some other obligation. The owner of the property, who grants|
| |the lien, is the lienor, and the person who has the benefit of the lien is the lienee |
| |(source: Wikipedia) |
|LIQUIDATED DAMAGES |Liquidated damages clauses must be a genuine pre-estimate of the loss to be suffered by the |
| |party in the event of a breach. The failure to do so runs the risk of the clause being |
| |classified as a penalty clause. Whether the term is a penalty clause or not is determined as|
| |at the time the contract was formed and not at the time the contract was breached. |
| |(Source: Gillhams Solicitors and Lawyers website, ) |
|LOCK-IN |Contractual commitment from a buying organisation to a selling organisation over a |
| |protracted period, resulting with the buying organisation being locked-in to that one |
| |selling organisation, locking out competitors for the duration of the contract, and |
| |requiring no further selling resource until the contract expiry approaches. |
|M&C |Monopolies and Cartels (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|MACHIAVELLIAN |A concept linking personality to bargaining behaviour developed by Christie and Geis (1970) |
|MATERIALS MANAGEMENT |Organisational model dating from the 1970s in which purchasing and other materials functions|
| |were integrated in an early form of ‘supply management’ model (see Farmer (Farmer, 1985 |
| |p.86). |
|MFP |Most Favourable Position (Kennedy et al., 1980 p.15) – The ideal positions of each party |
| |which create the boundaries of the zone of possible agreement (ZOPA) called the ‘ideal’ by |
| |Steele (1989), and referred to as the ‘resistance point’ by Lewicki et al. (2006). |
|MI |Market Intelligence (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|MICE |Money, Ideology, Compromise or Ego. |
|MIL (Kennedy et al., 1980) |Must, Intend, Like; objectives you Must achieve, those you Intend to achieve, and those you |
| |would Like to achieve. |
|MINDFULNESS |Aform of meditation derived from Buddhist tradition that emphasises present moment |
| |awareness. Has been applied to mediation and dispute resolution. |
|MO |Motivational Orientation (Rubin and Brown, 1975) - |
|MONOPOLY |a persistent market situation where there is only one provider of a product or service |
|MONOPSONY |(From the Greek word μόνοψώνιο = only one buying) is a market form with only one buyer, |
| |called a "monopsonist," facing many sellers. It is an instance of imperfect competition, |
| |symmetrical to the case of a monopoly, in which there is only one seller facing many buyers.|
| |The term "monopsony" was first introduced by Joan Robinson in 1933. The term "monopsony |
| |power", in a manner similar to "monopoly power" is used by economists as a short hand |
| |reference to buyers who face an upwardly sloping supply curve but that are not the only |
| |buyer; better, but more cumbersome terms may be oligopsony or monopsonistic competition. |
|“MOTHER HUBBARD” |Technique of insisting on a lower price by claiming you can’t possibly afford the asking |
| |price. |
|MSCLS |Marketing & Sales Closed Loop System |
|MPP |Maximum Plausible Position – more commonly referred to as the MFP or ‘ideal’, or ‘target |
| |point’. |
|MULTI-SOURCING |The purchasing practice of buying an item or service from several (more than two) suppliers,|
| |dividing the business between them. |
|MUTUALITY |[ ] see ASYMMETRIC MUTUALITY AND IDEAL OR SYMMETRIC MUTUALITY |
|MvB |Make versus Buy (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|NBI |Negotiable Bid Issues |
|NEGOTIAUCTION |A hybrid combination of a negotiation and an auction, used for the sale of high value |
| |assets. (Not to be confused with FreeMarkets reverse procurement auction software.) High |
| |profile negotiauctions have included the sale of RJR Nabisco in the late 1980s, Paramount’s |
| |sale of the hit sitcom ‘Frasier’ to NBC in 2001, Vivendi Universal’s sale of its Universal |
| |division in 2003 to General Electric for $14 billion, and the sale of Glenmorangie, the |
| |Scotch whisky distiller to LVMH for £300 million in 2004. |
| |Common features of negotiauctions are: |
| |1. Several potential buyers, usually between 3 and 10. |
| |2. Asymmetric information between the seller and buyers (the seller knows more about the |
| |asset than potential buyers, at least initially) |
| |3. One-to-one meetings similar to standard negotiations between the seller and potential |
| |buyers. |
| |4. One or more rounds of bidding among potential buyers in ways that resemble auctions. |
| |(Subramanian and Zecknauser, 2005) |
|OBB |Organisational Buying Behaviour |
|OCR |Obligations Contractual Relationship – model developed by Sako (1992), based on Williamson’s|
| |(1975) transaction cost economics model. (see also ACR) |
|OEM |Original Equipment Manufacturer |
|OLIGOPOLY |A market dominated by a few sellers |
|OLIGOPSONY |A market in which there are few buyers |
|OPPORTUNISM |Self-interest with guile (Cox, 2004 p.30) |
|OSB |Organisational Seller Behaviour |
|P2P |Purchase To Pay |
|PARASITIC INTEGRATION |Instances where value created by negotiators is taken from parties who are not at the |
| |bargaining table. Such arrangements are parasitic because the benefits achieved by |
| |negotiators come at the expense of others. (Created by Gillespie and Bazerman.) |
|PARETO PRINCIPLE |The idea that in terms of purchases, a large majority of the value of a portfolio of |
| |purchases (80%) are concentrated in a few key items (20%). |
|PENALTY CLAUSE |Penalty clauses are terms of contracts that seek to impose upon a party to the contract the |
| |obligation to pay a sum of money in the event that the contract has been breached, and the |
| |terms of the contract cannot be properly classified as a liquidated damages clause. Under |
| |English law sums specified as being payable under penalty clauses are not recoverable, as |
| |opposed to liquidated damages, which are. (Source: Gillhams Solicitors and Lawyers website, |
| |) |
|PEST |see PESTLE |
|PESTEL |Political, Economic, Social, Technological, Environmental and Legal factors |
|PETARD TACTIC |A petard was a medieval small bomb used to blow up gates and walls when breaching |
| |fortifications. The word remains in modern usage in the phrase ‘to be hoist by one's own |
| |petard’, which means "to be harmed by one's own plan to harm someone else" or "to fall in |
| |one's own trap". |
| |As a negotiation tactic it is a device aimed at trying to get an opponent to state a view |
| |which supports one’s owns concerns, in order to take advantage of it oneself and incorporate|
| |it into the proposed agreement. (Lax and Sebenius, 1986) |
|PICOS |Program for Improvement and Cost Optimisation of Suppliers, established by Lopez in General |
| |Motors. A later article in the Wall Street Journal defined PICOS as Purchased Input Concept |
| |Optimisation with Suppliers. |
|PLANT |Someone planted in a crowd, or more likely on the floor in an auction, to encourage others |
| |unaware of the set-up to purchase particular goods or services. |
|PM |Procurement Marketing (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|PQQ |Pre Qualification Questionnaire |
|PREFERRED SUPPLIER |Supplier placed on a list of preferred suppliers, to be given preference over unknown |
| |suppliers. May also be known as an Approved Supplier. |
|PSL |Preferred Supplier List |
|PSS |Post-Settlement Settlement |
|PTN |Post Tender Negotiation |
|Purposive Contract |Outcome-based contract which aims to describe the desired end result without specifying the |
| |component parts in detail |
|RBT or RBV |Resource-Based Theory or Resource-Based View – (Wernerfelt, 1984, p172; Rumelt, 1984, |
| |p557-558, Prahalad & Hamel) add references. |
|REL |Relationship Positioning (Russill, 1997; an element in Russill’s ‘Organising for the |
| |planning performance’). |
|RESISTANCE POINT |Lewicki’s term for the point beyond which each negotiating party will not go. |
|REVENUE RECOGNITION |Rules imposed under the Sarbanes-Oxley legislation in the USA (following the spectacular |
| |Enron, Worldcom collapses due to false accounting methods) regarding the timing that revenue|
| |can be recognised. Commonly used by salesmen as an excuse for not agreeing to negotiate. |
|RFP |Request for Proposal |
|RFQ |Request for Quotation |
|RM |Risk Management (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|RMFP |Revised Most Favourable Position – Kennedy et al. (1980) |
|RMKT |Reverse Marketing (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|ROI |Return on Investment |
|ROMALPA CLAUSE |A clause covering retention of title of goods being sold until they have been paid for in |
| |full by each successive customer along the supply chain. |
|RP |Reservation Price |
|RPM |Relationship Portfolio Mapping – An approach to marketing and sales which focuses on the |
| |relationship management choices that sellers must make in any transaction (Cox et al., |
| |2004). |
|RS |Realistic Settlement – an alternative term for Resistance Point. [check – is this correct or|
| |does it mean the opposite?] |
|RSZ |Realistic Settlement Zone, more commonly known as ZOPA (‘The Pocket Negotiator’, Michael |
| |Hartley-Brewer). |
|SA |Supplier Appraisal (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|SC |Supplier Conditioning (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|SCA |Sustainable Competitive Advantage |
|SCS |Search for Competitive Source(s) (Russill, 1997; an element in Russill’s ‘Organising for the|
| |planning performance’). |
|SD |Source Dependency (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|SERVICE CREDITS - | |
|SETTLEMENT RANGE |Also known as the bargaining range or ‘ZOPA’, usually defined as the difference between the |
| |least a seller will take and the most a buyer will pay. Karrass (1974) goes further and |
| |defines it as the difference between ‘the buyer’s estimate of the seller’s minimum’ and the |
| |‘seller’s estimate of the buyer’s maximum’. The range is based on each party’s estimate of |
| |the situation, not the situation itself. |
|SHILL |North American term for an associate of a person selling goods or services, who pretends no |
| |association to the seller and assumes the air of an enthusiastic customer. The intention of |
| |the shill is, using crowd psychology, to encourage others unaware of the set-up to purchase |
| |said goods or services. |
|SINGLE SOURCE |The purchasing practice of buying an item from one supplier, even though more suppliers are |
| |available. |
|S.I.T.O. |Supranational Independent Thinking Organisation. A term created by Edward de Bono for a |
| |proposed conflict resolving body to offer assistance to parties in conflict situations. |
|S/M |Single/Multiple Source (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|SMART |Specific, Measurable, Attainable, Results oriented and Time based |
|SOLE SOURCE |The only known available (or viable) supplier of a particular item or service. |
|SNT |Single Negotiation Text - A single-text negotiating strategy is a form that employs the use |
| |of a single document that ties in the interests of the negotiating parties, who add, |
| |subtract and refine the text, which represents a "placeholder agreement" and is intended to |
| |be the foundation for a final ratified agreement. Since all parties must agree to the final |
| |document and offensive entries may lead to a cessation of the process, parties must be |
| |sensitive to how their changes to the text will be perceived by the other parties. |
| |Fisher (1981) attributes the device to Louis Sohn (Lax and Sebenius, 1986) |
|SP |Supplier Positioning (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|SPIN-Selling |Situation questions, Problem questions, Implication questions, Need-payoff questions |
| |(Rackham, 1987) |
|SPO |Supplier Preference Overview (Russill, 1997; an element in Russill’s ‘Organising for the |
| |planning performance’). |
|SRM |Supplier Relationship Management |
|STEEP |see PESTLE |
|STEP |see PESTLE |
|STRATEGIC MISREPRESENTATION |Raiffa adopted this phrase from game theorists and mathematical economists to describe |
| |common exaggerations in negotiations, otherwise known as lies (Raiffa, 1982 p.142). |
|STRATEGIC PARTNERSHIP |An agreement between two organisations to co-operate for mutual benefit and understanding of|
| |business needs and requirements – not a partnership in the legal sense. (Greenhalgh, 1995, |
| |Annex A, p.A4) |
|STRUCTURAL POWER RESOURCES | |
|SUBSERVIENT SELLER SYNDROME (SSS) |(Cotter and Henley, 2009) |
|SUPPLIER DOMINANCE | |
|SUPPLIER PREFERENCING |Originated by Paul Steele and Brian Court in the mid 1990s this model enables purchasing |
| |functions to understand how a supplier might value its account with them. |
|SUPPLY CHAIN MANAGEMENT | |
|SWEEPER CLAUSE |A technique employed in a contract to protect the buyer from unscheduled chargeable contract|
| |changes by a service provider. The contract clearly specifies in one place all obligations |
| |on the buying organisation, and the ‘sweeper clause’ sweeps up all other responsibilities |
| |for providing the service, whether identified or not, and places them firmly on the service |
| |provider. |
|SWOT |Strengths, Weaknesses, Opportunities and Threats |
|SYMMETRIC MUTUALITY |A state that exists between negotiating parties when they each have the same information |
| |available to them about the subject of the negotiation. |
|TAC |Total Acquisition Cost |
|TARGET POINT |Lewicki et al.’s (2006) term for the ‘ideal’ or ‘MFP’. |
|TC |Total Cost (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|TCE |Transaction Cost Economics (or, according to Cox, Transaction Cost Economising) |
|TCO |Total Cost of Ownership |
|THE NEGOTIATOR’S DILEMMA |A concept, or metaphor, devised by Lax and Sebenius (1986) which suggests that every |
| |negotiator has a choice between adopting an integrative or win-win approach, which they |
| |characterise as ‘creating value’, or taking a distributive win-lose approach, which they |
| |term ‘claiming value’. |
|THE WINNER’S CURSE |The winner's curse is a phenomenon akin to a pyrrhic victory that occurs in common value |
| |auctions with incomplete information (asymmetry of information). In short, the winner's |
| |curse says that in such an auction, the winner will tend to overpay. (Wikipedia) The |
| |expression carries implications that any object’s most likely buyers are those who |
| |overestimate its worth, and an object of uncertain value is more likely to be owned by |
| |people who overestimate its value than by people who underestimate it. A variation on |
| |buyer’s remorse. |
|TQM |Total Quality Management (Deming) |
|TUPE |Transfer of Undertakings Protection of Employment |
|USER |Defined by Miller and Heiman (1988) as the Decision Maker who has the power to give End User|
| |approval to a purchase |
|USP |Unique Selling Proposition |
|VA |Vulnerability Analysis (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|VFM |Value for Money |
|VI |Vendor Intelligence (Russill, 1997; an element in Russill’s ‘Organising for the planning |
| |performance’). |
|VMI |Vendor Managed Inventory |
|W.H.A.T. |(Shapiro et al., 2001 p.122) A questioning template: |
| |Why? |
| |Hypothesise. |
| |Answer. |
| |Tally (summarise) |
|ZEUTHEN’s |Conflict Avoidance model – a two stage process to determine how much conflict you will |
| |accept in a negotiation. First compare the value of sticking to your current position with |
| |that of accepting the other party’s offer. Second, evaluate the potential for a conflict or |
| |a breakdown in negotiations if you stick to your offer, and decide whether the conflict is |
| |worthwhile. |
|ZOPA |Zone of Possible Agreement - also sometimes known as the ‘Settlement Range’ or ‘Bargaining |
| |Range’ |
APPENDIX 1: Core Interview Negotiation Questions
These questions all seek to discover your views, based on your personal experience of negotiations, based on what you do.
The questions asked in the core interviews covered thirteen key areas evolved as follows:
1. What makes a good negotiator?
2. Phases
2a) What would you say are the main phases or stages in a negotiation?
2b) Do you deliberately cover the phases in any particular order, or is that not important?
i) Preparation
How do you prepare for a negotiation?
Do you set limits or targets?
Do you ever have to deviate from your plan?
ii) Relationship building
iii) Information gathering
iv) Information using
v) Bidding
vi) Closing the deal
vii) Implementing the agreement
viii) Documenting the contract
ix) Reviewing the process - lessons learned
3. Techniques
3a) What persuasion techniques exist in negotiations?
3b) Do you have a favoured approach that works better than the others for you?
Do you use the following: Y/N
i) An exercise in logical persuasion
What would be your advice about opening offers in negotiations?
Can the opening offer determine the outcome of a negotiation?
ii) An exercise in exchanging mutual concessions - Bargaining
How useful is this approach in a negotiation?
iii) A use of power & coercion
iv) Use of compromise
What are your views on compromise as an approach in a negotiation?
v) Use of emotion
How useful is this approach in a negotiation?
vi) Understanding the other party's genuine objectives around an issue
How useful is this approach in a negotiation?
Could you estimate what proportion of your effort in a negotiation would be directed towards each of the above approaches?
Are there any other approaches or techniques not mentioned above?
4. Ethics & Integrity
Tell me your view of personal integrity in negotiations?
Do you ever deliberately deceive your opponent in negotiations?
5. Personal Styles
How would you describe your personal negotiation style?
6. Approaches
Integrative vs Distributive
Confrontation vs Collaboration
Have you heard the description of negotiations as integrative and distributive?
Have you heard the description of negotiations as collaborative and adversarial?
Have you heard the description of negotiations as win-win and win-lose?
Do you think these descriptions are true in your experience?
Is there a continuum from one to the other?
Tell me about your experience of adversarial (distributive) negotiations
Tell me about your experience of collaborative (integrative) negotiations
Can you recall examples of collaborative negotiations you have been involved in?
If so, were there any particular circumstances that led to the negotiation being collaborative?
What % of all buyer-seller negotiations that you've been involved in would you say have been collaborative?
7. Power
Tell me about the power relationship in negotiations, based on your personal experience?
To what extent is the balance of power just the perception in the negotiators' minds?
To what extent is the perception of the balance of power agreed & understood between the parties?
What gives a buyer power in a negotiation?
What gives a seller power in a negotiation?
Tell me about the relative size of the organisation as a power attribute?
How much is the dependency of your organisation upon the other party an attribute of power?
Do you think power is exploited differently by skilled and unskilled negotiators?
8. BATNA
In your experience, how often does a negotiator have a real Alternative? (BATNA)
How do you deal with a negotiation where it is becoming clear that it is not going to deliver your desired outcome?
change tactics/techniques
break
compromise
9. Lessons
What key lessons have you learned from your experience of difficult negotiations?
10. Personality
Are the personalities involved in a negotiation separate from the subject matter being negotiated?
11. Opponents
How do you rate the opponents that you typically come up against in major (high value) negotiations?
12. Contract
How important is the written contract when agreement has been reached?
How common is it for major deals not to be documented in the form of contracts?
If a contract is silent on a particular issue, is this likely to favour the buyer or the seller, or both equally?
Is it true that the contract is only important when things go wrong?
13. Influence & Corruption
Have you experience of 'golf course' deals being made outside the normal work environment?
Can you give me an insight into one or two examples?
Are major sourcing/outsourcing decisions usually taken for the right reasons?
Are such decisions usually taken at the right level within the organisation?
Are such decisions usually taken with an appropriately detailed level of due diligence?
Have you ever seen bad decisions (for an organisation) imposed by very senior people within it?
APPENDIX 2: Agreement of Informed Consent
Steve Hubbard
Barclay House, Watling Street, Little Brickhill, Bucks., MK17 9NB
Telephone Home 01525 261383 mobile 07801 561269
e-mail: stevehubbard@teesdaleonline.co.uk
Agreement of informed consent
Dear [Actor],
NEGOTIATIONS BETWEEN BUYERS AND SELLERS
What happens when buyers and sellers negotiate?
I am most grateful for your agreement to help me with my research for a doctoral thesis on the above subject, which I am undertaking at the University of Glamorgan, by participating in an interview and completing a questionnaire. The research will be conducted in accordance with the attached IPSERA Code of Ethical Research Conduct. In addition I wish to reassure you that you are free to withdraw from this research at any time. Your participation is entirely voluntary.
The purpose of my research is to answer the question:
“Are the dominant concepts and theories developed in the academic literature regarding negotiations between buyers and sellers supported by evidence from professional negotiators?”
The outcome of this research will be submitted to the University of Glamorgan in the form of a thesis, and in addition anonymous outcomes may be published and/or presented in academic publications and/or conferences and to non-academic groups as well as publications and/or conferences including possible broadcasts on radio or TV. Your confidential data will not be shared with other actors.
The interview will be recorded and transcribed for analysis. The recorded interview, the transcription and any related analysis will be used for the purposes of this research. Your name and organisation will remain anonymous at all times. In the event that this data is required for any unrelated research, I shall seek your separate agreement to use it again for that different purpose. The data collected will remain in my possession and ownership, but you will be able to gain access to it at any time on request.
Signed ___________________________ ___________________________
Stephen Grant Hubbard [Actor]
[Date] [Date]
APPENDIX 3: Non-specialist ethical guidelines for research
University of Glamorgan
Prifysgol Morgannwg
[pic]
Non-Specialist Ethical Guidelines for Research
INTRODUCTION
Scope of these guidelines
These guidelines relate to research in general and should be complied with by all researchers within the University, whether they are members of staff or post-graduate or undergraduate students. Research includes market and corporate research.
These guidelines do not replace those covering research in specialist areas. People carrying out research in these areas should adhere to specialist guidelines and seek whatever approval is required from specialist bodies as well as approval from School Ethics Committees (see below).
Because of the close correlation with ethical issues, when dealing with human subjects and compliance with the Data Protection Act 1998 researchers are strongly advised to consult the University’s Handbook on Data Protection or the University’s Data Protection Officer.
Responsibility for carrying out these guidelines
Ultimate responsibility for applying these guidelines and for day-to-day compliance with them lies with individual researchers, whether staff or students. Ethics Committees can only carry out overseeing and advisory roles.
Members of staff with responsibility for undergraduate, postgraduate or post-doctoral research projects, as well as for research by members of staff, are responsible for ensuring that all researchers are aware of and agree to abide by these guidelines. Staff are required to give their School Ethics Committee evidence that they have read the guidelines and have taken or will take appropriate action. Details of how to do this are given in the final section of these guidelines.
GENERAL ETHICAL RESPONSIBILITIES.
Ethics is a complex field, but in professional contexts its fundamental concerns are to:
• respect the autonomy of individuals
• avoid causing harm
• treat people fairly
• act with integrity
• use resources as beneficially as possible
Dilemmas arise when these concerns conflict. When this happens the concerns must be weighed against each other. Individuals can either aim for compromise between them, or give priority to one concern over another. There may be no ethically correct course of action, only the one the individuals judge to be appropriate after considering all these ethical concerns. The following paragraphs apply these concerns to research activities.
1.0 Respect the autonomy of all actors
It is the responsibility of researchers to respect the autonomy of everyone involved in research: these include fellow researchers, subjects and those who may not be actively involved in the research but about whom data is used. To respect autonomy researchers should obtain informed consent and avoid practices and methodologies which involve deceit, dishonesty, invasion of privacy, breaking confidentiality and using data for purposes not clearly explained to actors.
1.1 Informed Consent.
The new Data Protection Act is based on the idea that “informed consent” is “Any freely given, specific and informed indication of wishes by which the data subject signifies his agreement to personal data relating to him being processed.”
1.1.1 Research should be based on the freely given informed consent of those under study.
1.1.2 It is the responsibility of the researcher to explain as fully as possible, and in terms meaningful to the actors, the aims and the nature of the research, who is undertaking it, who is funding it, its likely duration, the possible consequences of the research and how the results are to be disseminated and all the likely disclosures of personal data.
1.1.3 The power imbalance between researcher and researched should be addressed. Care should be taken to ensure that the latter are not pressurised into participation. Research actors should be aware of their right to refuse participation whenever and for whatever reason and should not be given the impression that they are required to participate. It should also be recognised that research may involve a lengthy data-gathering period and that it may be necessary to regard consent not as obtained once and for all, but subject to renegotiations over time.
1.1.4 The researcher should explain how far research actors would be afforded anonymity and confidentiality. Actors should have the option of rejecting the use of data-gathering devices such as tape-recorders and video cameras.
1.1.5 If there is a likelihood of data being shared with or divulged to other researchers, the potential uses of the data should be discussed with the actors and their agreement to such use should be obtained.
1.1.6 While the researcher should take every practicable measure to ensure the confidentiality and anonymity of research actors, s/he should also take care not to give unrealistic assurances or guarantees of confidentiality. Research actors with easily identifiable characteristics or positions within an organisation should be reminded that it may be difficult to disguise their identity without distorting the data.
1.1.7 Where research actors are young children or other vulnerable groups such as older, disabled or sick people or people with learning difficulties, whose understanding is impaired in some way so that they are unable to give full informed consent, it may be necessary to use a proxy in order to gather data. In this case great care must be taken not to intrude upon the privacy of the vulnerable actors. The researcher should consult relevant professionals, parents/guardians and relatives, as appropriate. Researchers should attempt to obtain the informed consent of children and their parents and in relation to school children those in loco parentis.
1.2 Covert Research
With the exception of medical research, it is difficult to see whether any research involving covert methods could be legal under the Data Protection Act. This specifies that for personal data obtained on the data subject to be fair, it is necessary to take account of whether any person from whom the data is obtained has been misled or deceived as to the purpose of the processing.
1.2.l It is recognised that there is a continuum of covert-overt research and therefore difficulty in defining research as entirely covert or overt. Researchers should, however, endeavour to avoid the use of deception in their research methods since this violates the principle of informed consent and may invade the privacy of those under study, particularly in non-public places. If it appears that the employment of covert research methods is the only means to obtain the required data, the researcher should consult the Data Protection Officer.
Covert research in non-public places or experimental manipulation of research actors without their knowledge should be a last resort when it is impossible to use other methods to obtain the required data. It is particularly important in such cases to safeguard the anonymity of actors. The researcher should consult the University’s Data Protection Officer in these circumstances.
1.2.2 If covert methods are employed and informed consent has not been obtained prior to the research, every attempt should be made to obtain this post hoc.
1.2.3 Researchers should consider whether the likely benefits of research justify the ethical unacceptability of using covert methods.
1.3 Confidentiality and Anonymity
1.3.1 The anonymity and privacy of research actors should be respected and personal information relating to actors should be kept confidential and secure. Researchers must comply with the provision of the Data Protection Act and should consider whether it is proper or appropriate even to record certain kinds of sensitive information.
1.3.2 Threats to the confidentiality and anonymity of research data should be anticipated by researchers and normally the identities and research records of actors should be kept confidential, whether or not an explicit pledge of confidentiality has been given.
1.3.3 Where possible the researcher should anonymise the personal data such that it would not be possible for the University, its staff or students or the researcher, to identify the individual from that data and any other data held.
2.0 Avoid harm
2.1 A primary responsibility of researchers is to avoid causing harm. This consideration should be an over-riding factor at all stages in a research project, such as the formulation of objectives, design and development of methodology, conduct of research, and presentation, dissemination and use of findings. Harmful effects may also occur some time after cessation of the research process and publication of results. The possible consequences of every stage should be assessed and every step taken to ensure safety and prevent adverse effects on researchers, subjects, individuals about whom data is used, others in the community in which the research occurs and those who could be affected by the results of the research.
2.2 Harm includes physical and psychological damage and stress to individuals, invasion of their privacy, damage to their self esteem and damage to the social fabric of their community. Harm may also include damage to the reputation of the research discipline and University and damage to the interests of future research. These can be caused by a project which is ill-conceived, carelessly executed or irresponsibly used.
2.3 If the objectives of a piece of research cannot be achieved without risk of harm researchers should consider abandoning the project. They should only apply for approval to continue if they can provide an overwhelming justification for doing so. Should approval be granted, they must ensure that every effort is made to reduce the risk and must make clear to all who may be involved in the project or affected by it that the risk exists.
N.B. If researchers think there is a possibility of harm occurring, they should consult with the University’s Data Protection Officer. If harm occurs the research exemptions under the Data Protection Act cannot be used.
3.0 Treat everyone fairly, whether actors or not
To treat everyone fairly, researchers should attempt to:
3.1 Meet the needs of everyone
Researchers have a responsibility to ensure that the needs of everyone who may be affected by the research are met as far as possible.
Needs include sufficient information, guidance, equipment, support and other resources to:
• participate fully in the research process
• deal with any effects of the execution and cessation of the research and the dissemination of its findings.
Communities as well as individuals may have needs arising from the execution and consequences of research.
3.2 Give equal consideration to the interests of everyone.
Care should be taken to ensure that the values and attitudes of researchers do not result in the interests of some people being given unequal consideration. It is easy, for example, to regard the interests of people peripheral to the research activity as of no concern to the researcher. But if people may be affected by the research, however minimally, then steps should be taken to protect their interests.
4.0 Carry out research with integrity
4.1 Research is carried out with integrity when researchers genuinely strive to achieve the objectives of sound research by ensuring valid methodology, objective research processes and well-grounded findings. Research which lacks integrity is ethically unacceptable as it not only misrepresents what it claims to be but also mis-uses resources.
4.2 The objectivity and impartiality of research can be threatened if it is in any way dependent on a sponsor, institution or actors who have particular interests or values. Researchers should therefore ensure that the objectives of all parties are clearly articulated at the outset, and that the research is set up in such a way that it is independent of any special interests. It will then avoid being invalidated by “hidden agendas”.
5.0 Use resources as beneficially as possible
5.1 Resources include funding, institutional facilities, input of researchers and subjects, and sources of material – such as archives, experimentation and data about individuals and communities. Resources also include research opportunities: funding may be available for only a limited number of research projects in a particular discipline, and there may be a limit to how many times fieldwork can be carried out in a particular locus.
5.2 It is the responsibility of researchers to obtain the greatest benefits they can from the resources they use. In general terms benefits may be seen as whatever promotes the welfare of living beings. In practical terms most research is likely to contribute to this goal by aiming for more limited objectives. Researchers should design projects to achieve the most beneficial use of resources. If it is evident that a particular project will not do this they should consider using fewer resources or putting forward an alternative project.
What you should do next...
Whatever type of teaching and research you are involved in, you are asked to participate in the following procedures:
For EXISTING teaching and research:
Since Fields are responsible for the delivery of academic work the University requires them to appraise the ethical aspects of their existing work collectively in a meeting. A Field may therefore ask you to discuss ethical aspects of your current teaching and research in a meeting and to note any ethical issues which have been identified. Minutes of this meeting will be sent to the relevant School Ethics Committee.
Existing teaching and research includes:
• all undergraduate and postgraduate teaching modules, dissertations and approved study schemes
• MPhil/Ph.D projects and postdoctoral projects
• staff research projects
• externally funded projects
• consultancies
For PROPOSED new teaching and research:
All teaching proposals - whether for new work or work that is to be revalidated - must be approved by a School Ethics Committee before they are submitted for validation. Whenever possible Fields should consider the ethical aspects of proposals before they are sent to the School Ethics Committee.
Similarly, proposals for new research work must be approved by a School Ethics Committee before the work begins. Where appropriate, the ethical aspects of research proposals should be considered by a Field, research committee or research unit before they are sent to the School Ethics Committee. Evidence that details of proposed projects have been approved by your SEC will be required by RPC/DRPC for registration/transfer purposes.
Once the ethical aspects of a teaching or research proposal have been considered a copy of form SECTR should be completed and submitted with the proposal descriptor to the School Ethics Committee. Normally one copy of the form should be completed for each proposal. However, if a Field considers that several modules present no ethical issues it may attach the modules of them all to a single copy of SECTR on which the modules are listed.
In some cases SEC approval for research may be conditional upon approval by outside professional bodies.
Proposed teaching and research activities include:
• all teaching and research modules and all study schemes that are to be (re)validated
• newly planned student research projects and newly-planned staff/postdoctoral research projects.
Your SEC will advise you how it wishes to receive information on proposed undergraduate and postgraduate dissertations. It may use form SECTR or collect data through a different route.
Once a teaching or research proposal has been approved by SEC and put into operation the day-to-day responsibility for reviewing and monitoring the ethical aspects of the project rests with its current module leader or director of studies.
APPENDIX 4: IPSERA Code of ethical research
1.0 Purpose
The association believes that researchers should conduct themselves with honesty and integrity and with regard to the welfare of humans, fellow researchers and the natural environment. The over-arching aim of research in the purchasing and supply field should be to improve the lives of humans through improvements in business practice based upon an increased understanding of business phenomena and techniques. The process of research should thus be regarded as a professional, ethically-based activity, subject to certain principles defining and delineating acceptable conduct. Those principles are summarised in this document.
We are aware that many educational and research institutions possess their own codes of ethical conduct, and this document is intended to supplement rather than replace any existing in-house guidelines.
2.0 Methods and methodology
IPSERA members should:
1. choose research strategies, designs, data collection methods and data analysis techniques solely on the basis of their ability to produce valid and reliable results in the research environment in which they are working.
2. prevent their personal preferences, prejudices and biases, or those of their data providers, clients or funding sources, from colouring or influencing their empirical, findings, or the interpretation of those findings.
withdraw from any research processes in which the client, source of funding or employer’s interests and wishes conflict with and/or prevent the uncovering and description of the empirical truth.
1. remain aware at all times of the difficulties of unequivocally determining causal relationships in empirical research into business phenomena containing elements of human opinions, influence or control.
3.0 Data sources/research subjects
IPSERA members should:
1. insist upon honesty in all aspects of funding application, bid submission, research design, data collection, analysis and results dissemination.
2. be aware of the needs and rights of human research subjects. The conduct and output of research should never directly cause, or indirectly facilitate, harm to human subjects.
3. pay special attention to the needs and rights of vulnerable human subjects such as children, the elderly and the mentally impaired, or individuals with low status positions within commercial organisations, who may be unaware of, or unable to effectively protect, their own rights.
4. be aware of the limited ability of smaller companies to defend their interests when in conflict with larger trading partners.
5. respect research subjects’ requests and requirements with respect to personal anonymity or the confidentiality of both primary and secondary data, unless such requests conflict with the law of the land.
6. respect subjects’ privacy needs, and avoid excessive impositions on their time.
7. avoid exposing clients to loss of income, revenue or competitive advantage
8. clearly explain to subjects, before investigations commence, the researcher’s intentions for the likely future uses of research outputs.
9. seek approval from the original research subjects for any new output application(s) whenever circumstances change and new applications for the outputs of research emerge after completion of the data collection process.
10. obtain research subject approval prior to the start of peer review processes whenever research leads to, or is likely to lead to, the publication of results in the public domain.
11. never use deceit or deliberate untruths with research subjects in order to circumvent or modify their wishes, preferences or rights.
12. seek ethical reviews of the proposed procedure in advance, and on completion, from independent senior peers, whenever some degree of deception, that does not threaten research subjects’ individual rights, is unavoidable in order to obtain valuable information.
13. declare in their published output any conflicts encountered; be they with personal financial interests, or the interests of friends, colleagues, clients or research subjects.
14. ensure that the conduct of research fulfils any relevant legal requirements in the country(ies) where data is collected or results are published.
4.0 Other researchers
IPSERA members should:
1. always acknowledge the contributions and intellectual property of others.
2. expose and report to their employing organisation, dishonest or unprofessional research practices in the purchasing and supply field.
3. be prepared to undertake tasks that serve the wider interests of the field such as academic editing and reviewing, or supporting the activities of relevant professional bodies.
5.0 Wider society
IPSERA members should:
1. support and encourage research whose conduct or outputs may lead to improvements in human welfare and the natural environment.
2. avoid involvement in research whose conduct or output encourages, facilitates or directly involves the abuse or exploitation of any person or the natural environment.
3. seek to disseminate as widely as possible to practitioners, academics and the wider society any improved understanding of processes, concepts, theories and techniques in the purchasing and supply field.
Proposed by: J. Ramsay June 2003
Circulated for comment to all IPSERA members during 2003
Approved by: The IPSERA AGM on 5.4.2004 in Catania, Sicily
Last amended: 15.4.2004
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APPENDIX 11
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