Negotiation in Management Decision Making

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Assignment 4

INTRODUCTION

Having been approached by The Director of the Cowley Council Council (CCC) regarding an industrial dispute with their refuse collectors, a report has been prepared to give insight into the field of negotiation and aid the council in their talks with the refuse collectors. The dispute is primarily concerned with CCC’s plans to change working practices but there are also a number of other issues regarding pay, shift patterns and recent cuts in the training budget and expenses. The refuse collectors are threatening to go on strike if their demands are not met, an action that the council would undoubtedly like to avoid.

According to Rubin and Brown (1975), negotiation refers to a process in which individuals work together to formulate agreements regarding an issue or issues in dispute. An agreement will only occur if the offers made are accepted by both of the parties (Neale & Northcraft 1991) and should lead to order and stability, foster social harmony, increase feelings of self-efficacy, reduce the probability of future conflict, and stimulate economic prosperity (Rubin et al 1994). Getting the negotiation game right is ever important for managers “as the global economy expands, as the service sector grows, as corporate restructuring continues and as employees continue to be concerned with managing their own careers” (Neale and Bazerman 1992: 3).

The initial stages of the report will cover theory and research on the decision-analytic approach to negotiation and discuss its relevance and potential use for CCC regarding its dispute with the Cowley refuse collectors. I will then identify potential biases and pitfalls that can act as barriers to effective negotiation that CCC should try to avoid. Finally I will conclude and outline suggested proposals for CCC to consider with the aim of assisting and improving their negotiations with the refuse collectors.

DECISION-ANALYTIC APPROACH

The decision-analytic approach to decision making is a more pragmatic alternative to the dominant psychological and economic perspectives, which contain a number of limitations. The individual-attribute literature fails to measure dispositions adequately, the situational literature does not consider the importance of the negotiator’s perceptions in interpreting situational characteristics (Neale and Bazerman 1991: 20) and the game theory unrealistically assumes “impeccably rational, supersmart people” (Raiffa 1982, 2001). What differentiates the decision-analytic approach is its focus on “how erring folks like you and me actually behave” rather than on how we would behave if we were “smarter, thought harder, were more consistent, were all knowing” (Raiffa, 1982: 21). Previous psychological and economic approaches have focused on describing how people make decisions or prescribing how to improve decision making. However, “very little interaction has occurred between the descriptive and prescriptive camps” (Neale and Bazerman 1991: 20), and it is Raiffa’s (1982) avocation of an “asymmetrical” prescriptive/descriptive relationship that makes the decision-analytic approach stand out, “creating a prescriptive need to descriptively understand how negotiators actually make decisions” (Bazerman et al 2001). Many scholars hold the view that the prescriptions gained from this model are more valuable than those offered by more traditional approaches (Lax and Sebenius 1986). Raiffa’s framework for approaching effective negotiations distinguishes three sets of information, a combination of which determines the structure of the negotiation game: each parties alternative to a negotiated agreement, each parties set of interests, and the relative importance of each parties interests. “To develop agreement, people need to get a good understanding of their own preferences and priorities, to communicate those to their counterpart, and to integrate information about other’s preferences and priorities into their own...
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