PREPARING FOR
A
M ULTI-PARTY N EGOTIATION
By Pablo M. Linzoain
INTRODUCTION AND DEFINITIONS
There is a substantial difference between negotiation involving two parties and those, which involve more than two parties. parties .
Sebenius (1996) states that the most powerful advances in
negotiation theory have been mainly inspired by the two-party case. On the other hand, multiparty negotiation negotia tion is often seen as a question of coalition-formati coalitio n-formation on (Rubin and Brown, 1975, Zartman, 1988). The coalitional possibilities make the analysis of a complex negotiation more difficult and interesting. Part of the game for each party is to build a relationship with the group and to form alliances with some of the members within it. In these relationships they should be able to improve their communication, trust, exchange of information and understanding each other’s needs and wants. According to Bazerman, Mannix and Thompson (1988), group negotiation is a process in which three or more persons, with their interests, decide how to resolve their conflicting preferences among issues. However, the knowledge, theory and practice of two-party negotiation do not transfer to a group situation readily (Bazerman and Neale, 1992).
DIFFERENCES B ETWEEN TWO-PARTY AND M ULTI-PARTY NEGOTIATION
A classic example of two-party negotiation is the standard strategic model Prisoner’s Dilemma Game, which has been called the negotiator’s dilemma by Lax and Sebenius (1986). Both
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negotiators face a choice between contending (“claiming value”) and problem solving (“creating value”). Hence, there are four possible outcomes, as shown in figure.
N EGOTIATOR 2 CREATE
CLAIM
GOOD
GR EA T
CREATE
GOOD
TER R IB LE
N EGOTIATOR 1
TER R IB LE
M ED IOC RE
CLAIM
GREA T
M ED IOC R E
Source: The negotiator’s dilemma, David Lax and James Sebenius (1986:39) “The Manager as Negotiator ” The Free Press, USA
The negotiator’s dilemma characterises the whole of a negotiation. The line between “creating” and “claiming” need not be clear-cut. Each negotiator has specific interest and s/he can reveal information early, late, throughout, or not at all; s/he can mislead by omission or commission, or be straight. The tension the negotiator’s dilemma reflects between cooperative impulses to create value and competitive impulses to claim it is the same regardless of the scale of the negotiation. The essence of an effective negotiator is being able to manage this tension, creating while claiming value (Lax and Sebenius, 1986). However, the dynamics of group negotiation are far
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more complex than those of the two-party negotiator’s dilemma. As has been seen, with two parties there are four possible outcomes, two sets of interests and one interaction. With three parties, the network grows; there are three sets of individual interests, three possible interactions between any two players and one interaction of all three. In a five-party situation, there are five sets of individual interests, ten possible two-player interactions, multiple potential three- and four-person subgroups, and one five-person group.
This web of interests and relationships
becomes increasingly complex as the number of parties grows (Bazerman and Neale, 1992). When the negotiation is between more than two persons, it makes coordination and cooperation much more important. It is relatively easy for two parties to find the motivation to 1
work together: with more than two, it is much more difficult. In the Harborco case (in which the author of this assignment played the role of the Governor’s Negotiator), some parties were motivated to work together, to build productive relationships. Some parties, however, showed little enthusiasm for coordinating their actions with others’, which resulted in disarray. It was no surprise to discover that the group needed time and resources to be able to work in coordination and cooperation with one another and to find solutions that maximize the interests of the parties. In the complex negotiation of the Harborco case, it was difficult at the beginning to understand the interests and preferences of each party. Only when the group started to listen to one another and to divide into sub-groups did the situation become clearer. In almost every case, in a multi-party negotiation it will take longer to differentiate interests and preferences of group members than it will between two parties.
1
D.Madigan and T.Weeks wrote this case study under the supervision of Professor Lawrence Susskind (M.I.T.), Assistant Professor, David Lax and the Negotiation Roundtable. Pablo M. Linzoain
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It is more complicated to build trust with two, three or six people than it is with just one. For example, in the Harborco case, as each party expressed its preferences and it became apparent that parts of the interests were incompatible, the parties grew more and more suspicious of one another. Negotiators did not know if the other party was pushing hard or it was a real conflict of interest. Communication about what each party wants and making the effort to understand the others’ needs are more difficult when the parties face the problem of lack of trust. To overcome this, parties have to make concessions, at least to their coalition partners. Finally, as was said in the introduction, multi-party negotiation is often considered to be an exercise in coalition-building. Negotiators should try to form coalitions in order to pool their resources and have greater influence on outcomes. This is perhaps the biggest difference between two-party and multi-party negotiation. Thus, it can be seen that it is more difficult to create value and new alternatives in a multi-party than in a two-party negotiation. In a multi-party negotiation, communication, information and exchange of ideas, trust, definition of interests and needs, and indeed the common goal between parties is more complicated to see than in a two-party situation.
STRATEGIC GUIDELINES RECOMMENDED NEGOTIATION
TO
PREPARE
FOR
PARTICIPATE
IN A
MULTI-PARTY
Raiffa stated “Significant conceptual complexities arise when even a single new party is added to a two-party negotiation: coalitions of two parties can now form”(1982:257).
In preparing for the formal process of multi-party negotiation, the negotiator should think hard about his/her real interest in the initiative. In a negotiation with a group of people, it is wasting other people’s time to arrive without a clear understanding of one’s own interest.
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The negotiator should then assess the other parties involved and their possible interests. It is important to identify potential coalition members and estimate which parties are going to have conflicts of interest. As the negotiation progresses, it is essential to begin to make coalitions with parties whose agreement will have the strongest influence over the other parties. Since a chaotic negotiation achieves very little, it is important to be calm and to allow others adequate time to speak. A negotiator needs to be able to send signals or code that s/he is prepared to move, and also to read signals that the other person is prepared to move. It is essential to be a good listener because listening enables the negotiator to obtain information and to identify what makes people move from one stage to the next. It has already been said that, in negotiation, information is power, so it is important not to miss any kind of signals that people send. The negotiator should reach agreement through packaging the separate issues on the table. Rubin and Brown (1975) tell us, “the social-psychological literature lends experimental support to the proposition that juggling multiple issues together can lead to settlements that are jointly preferred to those obtained by bargaining on an issue by issue basis.” However, adding issues together for negotiation purposes while ignoring their interdependence has its dangers. Bringing other parties to the table can increase support for the party who invited them. For example, in the Malta case, Dom Mintoff strengthened his position by involving the Soviets and the Libyans in the naval base negotiation with Great Britain. Malta thus forced Britain into making better concessions. Working with opponents separately can be useful to find support and to recognize needs. The negotiator representing Harborco Port took the initiative to talk with the different parties separately. This was a good way to build a coalition of support; dealing one to one allowed
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Harborco’s negotiator to understand better what was needed to secure the other parties’ agreement. Sometimes parties choose to emphasize the differences between themselves and the others. A more productive approach is to highlight the similarities and to work on the easier issues first, returning later to the bigger issues involving most conflict. The methods employed in coalition-building, what Lax and Sebenius (1986) call “strategic sequencing”, are crucial. The negotiator must consider “which parties are approached, in what order, openly or secretly, separately or together” (Sebenius, 1996).
IN CONCLUSION
Real-world negotiations are complex. It is unusual that a group should be wholly “claiming value” or wholly “creating value”. Normally, as has been said above, there is in every negotiation tension between creating and claiming value. According to Bazerman and Neale (1992), to negotiate successfully and deal with this tension, members must reveal their preferences, attempt to persuade others, adopt bargaining strategies and exchange information. The principal difference between two-party and multi-party negotiation is probably the need to build coalitions. The dynamics of group negotiation are far more complex than those between two parties; establishing communication, building up trust, identifying interests and goals become automatically more difficult when more than two parties are involved. Therefore, to prepare for a multi-party negotiation the negotiator must assess his/her own interests and those of the others, in order to calculate with which of the members around the table it would be most useful to make a coalition.
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Two other tactics for the negotiator to bear in mind for a multi-party negotiation are introducing additional parties to the proceedings and the packaging of the issues on the table. Finally, the pivotal factor in multi-party negotiation is the “strategic sequencing”.
About the author
Pablo M. Linzoain is an expert in Market Entry Strategies, either national or international. For the past ten years he has been working on the planning and execution of strategies and tactics for getting into new markets for important companies in various countries of Europe, South and North America, capitalizing on his expertise in diverse industries such as fast moving consumer goods (FMCG), manufacture, vehicle parts, commodities trading, insurance, film and advertising video productions. He now lives in USA, in the cities of Pittsburgh and Washington where he works as Managing Director of Consulting Global Business, Vice Marketing President for Fennell Consulting Group and Commercial Director for Tyerra. His academic background includes course of studies in USA, Europe and Argentina. He graduated from the Negotiation Programme of Law School, Harvard University, Boston, USA; and from the Business School of the Manchester Metropolitan University, Manchester, England. He obtained his double degree for the Master in Management Science of International Business and specialization in International Marketing, and for the MBA of the Institute of Management Sciences from the Manchester Metropolitan University and the catholic University of Córdoba, Córdoba, Argentina. He also obtained the certificate “Programme of Management Update” from
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University of California, Berkeley, USA. He graduated from the Business Faculty of the Catholic University of Córdoba, Argentina, with the degree of Licenciado (Bachelor of Science) in Business Administration. He is author of several papers, including “El estilo Argentino de Negociación” (Argentina Way of negotiating). He is also a permanent advisor for important publications on international negotiations.
References
Bazerman, Max H. and Neale, Margaret A. 1992. "Negotiating Rationally", USA: The Free Press. Bazerman, Man nix and Thompson 1988. “Groups as mixed-motive negotiations” , In, Lawler and Markovshy, eds., Advances in group process: theory and research, vol. 5 (Greenwich: JAI press) Lax and Sebenius 1986. “The Manager as Negotiator”, USA The Free Press. Raiffa, Howard 1982. "The Art and Science of Negotiation", Cambridge, MA: Harvard University Press. Rubin, Jeffrey Z. and Brown, Bert R. 1975. "The Social Psychology of Bargaining and Negotiation", London: Academic Press, Inc. Sebenius 1996. “Sequencing to Build Coalitions: With Whom Should I Talk First?” Wise Choices: Games, and Negotiation. Edited by Richard J. Zeckerhauser et al. USA, Harvard Business School Press. Chapter 18. Zartman, I.W. 1988. “Common Elements in the Analysis of the Negotiation Process ”, USA Cambridge Negotiation Journal, January-1988.
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