Stakeholder Negotiation

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Stakeholder Negotiation

• Negotiation Conflict Management
• Class 10
• John D. Blair, PhD
• Georgie G. William B. Snyder Professor in
  Management

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Stakeholder Map
My Organizations Name
Locate the stakeholders in the ethical issue(s)
and show relationships with organization and
each other
Red Internal Stakeholder Black External
Stakeholder
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A Multiparty Negotiation,Each Representing a
Stakeholder
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Steps in Stakeholder Negotiation

• Linking negotiating to business and stakeholder
  management strategies
• Assessing the stakeholders potential for threat
  and cooperation
• Diagnosing the negotiation situation by focusing
  on both relationship and substantive outcomes.
• Selecting an outcome-focused negotiation strategy.

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Steps in Stakeholder Negotiation Continued

• Refining the negotiation strategy based on
  sensitivity to key stakeholder contingencies.
• Implementing the negotiation strategy through
  appropriate tactics
• Changing the stakeholder-sensitive strategy as
  needed.
• Monitoring the ever-changing stakeholder
  negotiation context.

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Potentials for Threat and Cooperation

• Potential for threat
• Similar to developing a worst-case scenario
• Helps estimate the probable substantive outcomes
  of negotiation
• Potential for cooperation
• Similar to developing a best-case scenario
• Helps estimate the probable relationship outcomes
  of negotiation

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Stakeholder Types

• Supportive
• High potential for cooperation
• Low potential for threat
• Nonsupportive
• Low potential for cooperation
• High potential for threat
• Marginal
• Low potential for cooperation
• Low potential for threat
• Mixed blessing
• High potential for cooperation
• High potential for threat

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Stakeholder Management Strategies
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Stakeholder Action PortfolioManage In Current
Diagnosis or Try to Move?
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Changing Stakeholder Negotiation Context
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Negotiate with Stakeholders Under Rank-Ordered
Conditions

• Stakeholder potential for threat is low and
  potential for cooperation is high, presenting a
  highly favorable negotiation situation.
• Stakeholder potential for both threat and
  cooperation is moderate to high, presenting a
  moderately favorable negotiation situation.
• Stakeholder potential for threat is high and
  potential for cooperation is low to moderate,
  presenting a highly to moderately unfavorable
  negotiation situation.

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Diagnosing the Negotiation Situation by Focusing
on Outcomes

• Outcome Type 1 Substantive Outcomes
• Outcome Type 2 Relationship Outcomes

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Diagnosing the Negotiation Situation
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Outcome-Focused Negotiation Strategies

• Collaborate Strategy C1
• Compete Strategy P1
• Subordinate Strategy S1
• Avoid Strategy A1

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Selecting an Outcome-Focuses Negotiation Strategy
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Stakeholder Contingencies

• Can stakeholder representative ensure stakeholder
  acceptance?
• If no, negotiation strategy must be more
  cautious.
• Will likely stakeholder coalitions be acceptable
  to organization?
• If no, negotiation strategy must be more cautious.

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The Number of Partiesin a Negotiation

• The basic possible roles for parties in a
  negotiation
• A negotiating dyad
• Negotiating teams
• Agents and constituencies
• Unrepresented bystanders and audiences
• Third parties

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A Negotiating Dyad andAgents and Stakeholders

• A Negotiating Dyad
• When two isolated individuals negotiate for their
  own needs and interests
• Agents and Stakeholders
• A negotiator is not acting for himself but for
  others. We will call the negotiator in such
  situations an agent and the individuals he is
  representing a stakeholder

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A Negotiating Dyad- One Represents a Stakeholder
(Often Called a Constituency)
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Bystanders and Audiences

• Bystanders
• Those who have some stake in a negotiation, care
  about the issues or the process by which a
  resolution is reached
• Negotiators do not formally represent bystanders
• Audience
• Any individual or group of people not directly
  involved in or affected by a negotiation
• They may offer
• Input
• Advice
• Criticism

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Negotiators with Stakeholders, Bystanders and
Audiences
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Third Parties

• Third parties
• Bystanders who may be drawn into the negotiation
  specifically for the purpose of helping to
  resolve it
• Third parties often can reshape a polarized
  situation into a constructive agreement

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How Agents, Stakeholders and Audiences Change
Negotiations

• The first negotiating relationship is between the
  agent and constituent who must decide on their
  collective view of what they want to achieve in
  the negotiation
• The second relationship is with the other party
  the negotiator and the opposing negotiator who
  attempt to reach a viable and effective agreement
• The third type of relationship is composed of
  external bystanders and observers.
• They are affected by the negotiation outcome or
  have a vantage point from which to observe it
• They have some strong need to comment on the
  process or the emerging outcome.

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How Stakeholders etc. Change Negotiations Cont.

• Characteristics of audiences
• Audiences may or may not be dependent on the
  negotiators for the outcomes derived from the
  negotiation process
• Audiences affect negotiations by the degree of
  their involvement in the process
• Direct involvement
• Indirect involvement
• Audiences may vary in identity composition
  size relationship to the negotiator, and role in
  the negotiation situation

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How Stakeholders etc. Change Negotiations Cont.

• Audiences make negotiators try harder
• Negotiators seek a positive reaction from an
  audience
• Pressures from audiences can push negotiators
  into irrational behavior
• Audiences hold the negotiator accountable

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Tactical Implications of Social Structure
Dynamics The Negotiators Dilemma

• Question How can a negotiator satisfy both the
  stakeholders demands for firmness (and a
  settlement favorable to their interests), versus
  the other partys demand for concessions (and a
  settlement favorable to the other party or to
  their mutual gain)?
• Answer A negotiator must build relationships
  with both the stakeholder and the other party

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Common Tactics for Managing Stakeholders and
Audiences

• Manage stakeholder visibility
• Limit ones own concessions by making
  negotiations visible
• Use the stakeholder to show militancy
• Use the stakeholder to limit ones own authority
• Use great caution in exceeding ones authority

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Common Tactics for Managing Stakeholders and
Audiences Cont.

• Manage stakeholder visibility
• Increase the possibility of concession to the
  other negotiator by reducing visibility to
  stakeholders
• Establish privacy prior to the beginning of
  negotiations
• Screen visibility during negotiations
• Be aware of time pressure
• Establish a reputation for cooperation

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Common Tactics for Managing Stakeholders and
Audiences Cont.

• Communicate indirectly with audiences and
  stakeholders
• Communicate through superiors
• Communicate through intermediaries
• Communicate directly to the other partys
  stakeholder
• Communicate directly to bystanders
• Build relationships with audiences, stakeholders
  and other agents

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Indirect Communication with Opponent Through a
Manager
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Indirect Communication through An Intermediary
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When to Use an Agent

• When the agent has distinct or unique knowledge
  or skills in the issues
• When the agent has better negotiation skills
• When the agent has special friends, relationships
  or connections
• When you are very emotionally involved in an
  issue or problem
• When you want the flexibility to use negotiation
  tactics that require several parties
• When your natural conflict management style is to
  compromise, accommodate or avoid

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When to Negotiate for Yourself

• When you want to develop or reestablish a strong
  personal relationship with the other negotiator
• When you need to repair a damaged relationship
• When you want to learn a lot before you craft an
  agreement
• When your negotiation skills are better than
  those of any available agent
• When hiring an agent may be too costly
• When the image of being represented by an agent
  may make the other side suspicious
• When the agent is too emotionally involved,
  defensive and caught up in game playing

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Advice for Managing Agents

• The agent should have no authority to make a
  binding commitment on any substantive issues
• The agent should have the discretion to design
  and develop an effective overall negotiation
  process
• The stakeholder should focus communication to the
  agent on interests, priorities, and alternatives,
  rather than specific settlement points
• The stakeholder should establish clear
  expectations about the frequency and quality of
  reporting back to the stakeholder

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Advice for Managing Agents

• The agents authority should expand as the agent
  and stakeholder gain insight about the other
  parties through the negotiation process
• Specific instructions to the agent by
  stakeholders should be put in writing and be
  available to show to the other side
• The stakeholders should instruct the agent on
  what the agent can disclose in negotiation
• --interests, ranges of acceptable settlement,
  key facts, the principals identity, etc

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Situations with More than Two Parties

• Variations on a three-party negotiation
• One buyer is representing the other and two
  negotiations are occurring
• The seller is conducting a sequenced series of
  one-on-one transactions
• The seller is about to be unwittingly compromised
  by the buyers (this happens when the parties form
  coalitions or subgroups in order to strengthen
  their bargaining position through collection
  action).

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A Seller and Two Buyers
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What Is a Coalition?

• Interacting groups of individuals
• Deliberately constructed and issue oriented
• Exist independent of formal structure
• Lack formal structure
• Focus goal external to the coalition
• Require collective action to achieve goals
• Members are trying to achieve outcomes that
  satisfy the interests of the coalition

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Types of Coalitions

• Potential coalition an emergent interest group
  that has the potential to become a coalition by
  taking collective action but has not yet done so.
• Two forms
• Latent coalitions
• Emergent interest group that has not yet formed
• Dormant coalitions
• Interest group that previously formed, but is
  currently inactive

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Types of Coalitions Cont.

• Operating coalition one that is currently
  operating, active, and in place.
• Two forms
• Established coalition
• Relatively stable, active, and ongoing across an
  indefinite time and space
• Members represent a broad range of interests
• Temporary coalition
• Operates for a short time
• Focused on a single issue or problem

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Types of Coalitions Cont.

• Recurring coalitions may have started as
  temporary, but then determined that the issue or
  problem does not remain resolved
• Members need to remobilize themselves every time
  the presenting issue requires collective attention

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How and Why Coalitions Form and Develop

• When coalitions form
• Parties come together to pool efforts and
  resources in pursuit of common or overlapping
  goals
• Control over resources becomes the basis for two
  critical pieces of the coalition formation
  process
• What each member brings to the coalition
• What each member should receive if the coalition
  forms

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How and Why Coalitions Form and Develop Cont.

• Coalition formation is studied by
• A classic coalition game The 432 game
• Real world examples The European Economic
  Community (EEC)
• Coalitions form to preserve or increase resources
• Coalitions form in order to avoid a poor outcome
  that will occur if individuals acts alone (a
  social dilemma)

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How and Why Coalitions Form and Develop Cont.

• How coalitions develop
• Coalitions start with a founder
• Successful founders have extensive networks
• Founders benefits from early coalitions are
  likely to be small
• Coalitions build by adding one member at a time
• The founder finds an ally
• The founder can benefit if he or she understands
  the others interests

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How and Why Coalitions Form and Develop Cont.

• Coalitions need to achieve critical mass
• Find their joining threshold
• A minimum number of people get on board
• Others join because friends and associates are
  members
• Coalitions exclude weaker members who cant
  contribute

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How and Why Coalitions Form and Develop Cont.

• Linking new memberstiesbecome critical
• Strong ties a new member who can bring a lot to
  the coalition, but demands a lot in return
• Weak ties a new member who only brings a small
  amount to the tableenough to leverage the
  coalition to a winbut will not demand as much
  in return.
• Hence, weak ties can create strength for
  coalition founders
• Founders who have a large, diverse network of
  weak ties are often in a better situation to form
  a coalition than those who have a small, tightly
  organized network of strong ties

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How and Why Coalitions Form and Develop

• Many successful coalitions form quietly and
  disband quickly
• Revenge of the vanquished pits coalitions
  against each other so that each ones sole
  objective is to keep the other side from
  succeeding
• Turmoil within public acknowledgment of the
  coalition could damage future coalition activity
• Desire for anonymity the more publicly
  identified members become with the coalition, the
  more others may see their future actions as
  motivated by coalition membership and not by
  their own interests.

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Standards for Coalition Decision Making

• Coalition decision rules
• Three criteria to determine who receives what
  from the results of the coalitions efforts
• Equity standard
• Anyone who contributed more should receive more
  (in proportion to the contribution made)
• Equality standard
• Everyone should receive the same
• Need standard
• Parties should receive more in proportion to some
  demonstrated need for a larger share of the
  outcome

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Standards for Coalition Decision Making Cont.

• Where is the strength in coalitions?
• When is strength is weakness true?
• Any winning coalition obtains the same payoff
• Actors are interchangeable
• Contribute fewest resources, have least power or
  exert the least influence
• When is strength is strength true?
• The more resources a party holds or controls, the
  more likely he or she will a critical coalition
  member

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Power and Leverage in Coalitions

• How is power related to coalition formation?
• Strategic power
• Emerges from the availability of alternative
  coalition partners
• Normative power
• Derives from what parties consider to be a fair
  or just distribution of the outcomes
• Relationship-based power
• Shaped by the compatibility of preferences
  between parties

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How to Build Coalitions Practical Advice

• Say no when you mean no
• Share as much information as possible
• Use language that describes reality
• Avoid repositioning for the sake of acceptance

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Prospective Coalition Member Roles
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Prospective Coalition Member Roles

• Allies
• Parties who are in agreement with a negotiators
  goals and vision, and whom the negotiator trusts
• Opponents
• People with whom a negotiator has conflicting
  goals and objectives, but who can be trusted to
  be principled and candid in their opposition
• Bedfellows  
• Parties with whom a negotiator has high agreement
  on the vision or objectives, but low to moderate
  levels of trust

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Prospective Coalition Member Roles

• Fence Sitters
• Parties who will not take a stand one way or the
  other
• Fear taking a position because it could lock them
  in, be politically dangerous, or expose them to
  risk
• Adversaries
• Adversaries are low in agreement and cannot be
  trusted.

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Action Strategies for Building Relationships in
Coalitions

• With allies
• Affirm agreement on collective vision or
  objective
• Reaffirm quality of the relationship
• Acknowledge doubt and vulnerability with respect
  to achieving vision and collective goal
• With opponents
• Reaffirm relationship based in trust
• State vision or position in a neutral manner
• Engage in problem solving

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Action Strategies for Building Relationships in
Coalitions Cont.

• With bedfellows
• Reaffirm the agreement acknowledge caution
  exists
• Be clear about expectations in terms of support
• Reach agreement on how to work together
• With fence sitters
• State your position find out where they stand
• Apply gentle pressure
• Focus on issue have them tell you what it would
  take to gain their support

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Action Strategies for Building Relationships in
Coalitions Cont.

• With adversaries
• State your vision or goals
• State your understanding of your adversarys
  position in a neutral way
• Identify your own contributions to the poor
  relationship
• End the meeting by restating your plan but
  without making demands

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Two Situations that Involve Multiple Parties

• Multiple parties are negotiating with one another
  and attempting to achieve a collective or group
  consensus.
• Multiple individuals are present on each side
  of the negotiation
• The parties to a negotiation are teams against
  teams

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A Multiparty Negotiation,Each Representing a
Stakeholder
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The Nature of Multiparty Negotiations

• Differences between two-party and multiparty
  negotiations
• Number of parties
• Informational and computational complexity
• Social complexity
• Procedural complexity
• Strategic complexity

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What Is an Effective Group in a Multiparty
Negotiation?

• Effective groups and their members
• Test assumptions and inferences
• Share all relevant information
• Focus on interests, not positions
• Talk in specific terms
• Agree on what important words mean
• Explain reasons behind statements
• Disagree openly with any member of the group
• Make statements, then invite questions and
  comments

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What Is an Effective Group in a Multiparty
Negotiation?

• Effective groups and their members (cont.)
• Design ways to test disagreements and solutions
• Discuss undiscussable issues
• Keep discussions focused
• Avoid taking cheap shots or distracting the group
• Expect participation by all members in all phases
  of the process
• Exchange relevant information with nongroup
  members
• Make decisions by consensus
• Conduct self-critiques

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Managing Multiparty Negotiations

• The prenegotiation stage
• Characterized by many informal contacts among the
  parties
• The formal negotiation stage
• Structures a group discussion to achieve an
  effective and endorsed result
• The agreement phase
• Parties select among the alternatives on the table

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The Prenegotiation Stage

• Establish participants
• Form coalitions
• Define group member roles
• Understand the costs and consequences of no
  agreement
• Learn the issues and construct an agenda

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The Prenegotiation Stage Cont.

• Agendas as effective decision aids
• Establish the issues that will be discussed
• Define how each issue is discussed
• Set the order in which issues are discussed
• Introduce process issues (decision rules,
  discussion norms, member roles, discussion
  dynamics), and substantive issues
• Assign time limits to various items

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The Formal Negotiation Stage

• Appoint an appropriate chair
• Use and restructure the agenda
• Ensure diversity of information and perspectives
• Key process steps
• Collect thoughts and composure before speaking
• Understand the other persons position
• Think of ways both parties can win
• Consider the importance of the issue
• Remember parties will likely work together in the
  future

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The Formal Negotiation Stage Cont.

• Ensure consideration of all available information
• The Delphi technique
• An initial questionnaire, sent to all parties,
  asking for input
• Brainstorming
• Define a problem and generate as many solutions
  as possible without criticizing any of them
• Nominal group technique
• Brainstormed list of solutions ranked, rated, or
  evaluated

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The Formal Negotiation Stage Cont.

• Manage conflict effectively
• Review and manage the decision rules
• Strive for a first agreement
• Manage problem team members
• Be specific about problem behaviors
• Describe problem as team problem (we vs you)
• Focus on behaviors the other can control
• Wait to give constructive criticism
• Keep feedback professional
• Verify that the other has heard and understood

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The Agreement Phase

• Select the best solution
• Develop an action plan
• Implement the action plan
• Evaluate outcomes and the process

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The Agreement Phase

• Group chair or facilitator steps in moving toward
  a successful completion
• Move the group toward selecting one or more of
  the options
• Shape and draft the tentative agreement
• Discuss whatever implementation and follow-up
  needs to occur
• Thank the group for their participation, hard
  work and efforts

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Interteam Negotiations

• Integrative agreements more likely when teams are
  involved
• Teams are sometimes more competitive than
  individuals and may claim more value
• Accountability pressures are different for teams
• Relationship among team members affects
  negotiation process and outcomes

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Final Thoughts