TBS

1. Conflict &Negotiation ProcessProf.Shabir AhmadThe Business SchoolUniversity of kashmirJune 24, 2010 TBS

2. Conflict Summary • As people with different backgrounds, interests, visions, values, needs and ideologies interact, a variety of conflicts often develop. • A contemporary perspective on conflict recognizes that conflict is neither inherently good or bad but can be either depending on how it is dealt with. • Thus in dealing with conflict the critical issue is not so much the conflict itself but how it is managed.

3. Learning Objectives • Understand the nature of organizational conflict, its sources, and the way it arises between stakeholders and subunits • Identify the mechanisms by which managers and stakeholders can obtain power and use that power to influence decision making and resolve conflict in their favour

4. What is Organizational Conflict? • The clash that occurs when the goal-directed behavior of one group blocks or thwarts the goals of another • Although conflict is often perceived as something negative, research suggests that some conflict can actually improve organizational effectiveness • Can overcome inertia and lead to learning and change

5. What is Organizational Conflict? • Beyond a certain point, conflict becomes a cause for organizational decline • Conflict leads to inability to reach consensus and indecision • Too much time spent on bargaining rather than acting swiftly to resolve problems • On balance, organizations should be open to conflict and recognize its value

6. Pondy’s Model of Organizational Conflict • Conflict is a process that consists of five sequential stages • Stage 1: Latent conflict: no outright conflict exists, but there is a potential for conflict because of several latent factors • Sources of conflict include: • Interdependence • Difference in goals and priorities • Bureaucratic factors • Incompatible performance criteria • Competition for scarce resources

7. Pondy’s Model of Organizational Conflict (cont.) • Stage 2: Perceived conflict: subunits become aware of conflict and begin to analyze it • Conflict escalates as groups battle over the cause of conflict • Stage 3: Felt conflict: subunits respond emotionally to each other, and attitudes polarize into “us-versus-them” • Cooperation between units decreases • What began as a small problem escalates into huge conflict

8. Pondy’s Model of Organizational Conflict (cont.) • Stage 4: Manifest conflict: subunits try to get back at each other • Fighting and open aggression • Passive aggression – doing nothing • Organizational effectiveness suffers • Stage 5: Conflict aftermath: conflict is resolved in some way • If sources of conflict are not resolved, the dispute will arise again • Conflict aftermath

9. Pondy’s Model of Organizational Conflict

10. Conflict Functional Conflict Dysfunctional conflict A functional conflict is a confrontation Between groups that enhances and benefits the organization’s performance. Functional conflict can contribute to Creativity, innovation, and improved decision-making among other benefits. Dysfunctional conflict, on the other hand, Is that which harms the organization or hinders the achievement of organizational goals .

11. Macro organizational group Interpersonal Intra-individual Micro Conflict

12. Intra-individual Conflict • Frustration Model • Goal Conflict • Role Conflict and Ambiguity

13. Sources of Interpersonal Conflict Personal differences Information deficiency Role Incompatibility Environment Stress

14. Johari Window Not known to self Known to self Blind area Open area Known to others Not know to others Hidden area Unknown area

15. Factors Contributing to Intergroup Behavior • The interdependent nature of the relationship between work groups • Differences in goals • Differences in perceptions

16. Reactions to Conflict • Competing • Collaborating • Avoiding • Accommodating • Compromising

17. Managing Conflict • Organizational conflict can escalate rapidly and sour an organization’s culture • Managing conflict is an important priority • Organizations must balance the need to have some “good” conflict without letting it escalate into “bad” conflict • Choice of conflict resolution method depends on the source of the problem

18. Managing Conflict: Resolution Strategies • Acting at the level of structure • Because task interdependence and differences in goals produce conflict, alter the level of differentiation and integration to change relationships • Increase the number of integrating roles • Assign top managers to solve conflict • Rethink the hierarchy/reporting chain

19. Managing Conflict: Resolution Strategies (cont.) • Acting at the level of attitudes and individuals • Establish a procedural system that allows parties to air their grievances • Important for conflict between management and unions • Use a third-party negotiator • Exchange/rotate/terminate individuals • CEOs can also use their power to resolve conflicts and motivate units to cooperate

20. Strategies for Interpersonal Conflict resolution • Model the attitudes and behaviors you want your employees to emulate • Identify the source of conflict, structural or interpersonal • Focus on the task not personalities • Address conflict in a timely way • Learn for conflict • AND • Allow time to cool off • Analyze the situation’ State the problem to the other person • Leave the person an “out”

21. The common dilemma SOFTHARD • Participants are friends. • The goal is agreement. • Make concessions to cultivate the relationship. • Be soft on the people. • Trust others. • Make offers. • “Have to talk” • Relationship over substance • Open with a reasonable position • Concede generously • “Will”/offers • Participants are adversaries. • The goal is victory. • Be hard on the problem. • Distrust others. • “Don’t have to talk” • Dig in your position. • Open with an extreme position • Concede stubbornly • “Won’t”/threats

22. Negotiation Skills • People : Separate the people from the problem. • Interests: Focus on interests, not positions. • Options: Generate a variety of possibilities before before deciding what to do • Criteria: Insist that the result be based on some objective standard.

23. Communication Relationship Interests Create Value Options Legitimacy If “Yes” If “No” Commitment BATNA Claim Value Using the Seven Elements Enter the Circle

24. Preparation TYPICAL PREPARATION COMMON DIFFICULTIES • Gather “facts” • Create Positions • Build supporting arguments • Fix a bottom line • Create a concession strategy: offer/counter-offer • Risks a too-narrow focus, rigidity, and aversion to learning • Information overload • Scripted, unpersuasive: crafted to justify our views rather than change theirs • Often unrelated to a reality-tested, walk-away alternative • Places commitment before anything else, limits option creation

25. 7 Elements Preparation Checklist • Interests • What are ours? What are theirs? • Ask ourselves Why? What else? • Are there other parties’ interests to consider? • Which interests are shared, which are just different, and which are in conflict? • What are the priorities of these various interests? • Options • Brainstorming – what possible options might satisfy these interests? What might they or a third party propose? • What possible arrangements might creatively satisfy each parties’ interests? • Alternatives • What’s our BATNA? What’s theirs? • Can we improve ours? Weaken theirs?

26. 7 Elements Preparation Checklist • Legitimacy • What precedents exist? Is there a standard operating procedure? Law? Custom? Market Value? • Is there a fair process if we currently lack a single standard? • What “ought” to govern an agreement? • How can they justify the outcome to their constituents? • Commitment • What is our authority? Theirs? • What do we aspire to? What can we live with? • What kind of commitment do we want at each stage of the negotiation process? • Conditional agreement? Joint recommendation? Framework agreement? List of interests, options? Process agreement?

27. 7 Elements Preparation Checklist • Communication • What information do we want to listen for? • How can we show them they have been heard? • What message do we want left in their minds? • What is our process strategy? • How should we begin? What is our agenda? How might we close? How will we deal with surprises? What are the words we might use around the tough issue? • Relationship • How is it today, and how would we like it to be in the future? • What actions can we take to build the relationship without conceding or “buying” the relationship?

28. Some strategic guidelines • Use LEGITIMACY • Offer why an option is fair or defensible • Explain your reasoning(“Let me show you why/where this came from…”) • Before countering, inquire (“Why?” “Based on what?”) • Look for fair procedures • Use the Test of Reciprocity • Be sure that you are open to persuasion • Ensure Good Two-Way COMMUNICATION • Negotiate the process • Balance advocacy and inquiry • Speak for yourself, not for them • Listen and demonstrate that you have heard • Test operating assumptions

29. Classic positional bargaining Commitment (extreme position) Threat (BATNA) Offer Last offer Final last offer Will there be any deal? Final last offer Last offer Offer Threat (BATNA) Commitment (extreme position)

30. Some strategic guidelines • Acknowledge each BATNA as a choice • Reality test theirs • How well does it satisfy their interests? • Consider sharing yours as a decision you face • Use BATNA discussions as an opportunity: • To learn about interests • To invite options that exceed all BATNAs • COMMITMENT with care, after learning all you can • Commit early to process • Commit to substance at the end of the process • Review each party’s understanding, document if needed • Ask if it has the necessary detail to be implemented: who, what, where, when and how

31. Some strategic guidelines • Clarify INTERESTS, not positions • Ask “Why?”, “What else?”, “In what order?” • Share some of your interests • Share and test your understanding of theirs • Solicit criticism of possible options • Invent OPTIONS for joint gain • Jointly brainstorm multiple options • Separate inventing from deciding • Break up “decision making” • Option generation • Option evaluation/refinement • Commitment to an option

32. Some strategic guidelines • Deal with RELATIONSHIPS and substance, each on its own merits • Be “unconditionally constructive” on the relationship • Trustworthy, even if not trusting • Understanding, even if not agreeing • Accepting the person, even if not their behavior • Separate the people from the problem • Use interests, options, legitimacy to address the problem • Discuss relationship issues separately and explicitly • CCBD – Consider Consulting Before Deciding

33. Common errors for both SOFTHARD • Assumes a choice: RELATIONSHIP or substance • Focuses on positions, ignores INTERESTS • Ignores LEGITIMACY • Mixes inventing and deciding - limits OPTIONS • Places COMMITMENT before listening • One-way COMMUNICATION • Ignores real world ALTERNATIVES

34. Charting Negotiation Success Effective negotiation skills: The key stages P R E P A R A T I O N Strategy & Tactics S U C C E S S Review and learning

35. Some common measures of success Winning • Get the most concessions • Break their bottom line • Get the last possible dollar • They hurt more Not losing • No one is happier • Avoid confrontation • Get any deal • Just don’t get cheated

36. Repeat over time Multi-party Multi-issue External and Internal Tangible Factors Intangible Factors Complex negotiations

37. A Seven Element framework for measuring success No agreement, OR an agreement that: • Is better than any walk-away ALTERNATIVE Esp. ourBATNA – our Best Alternative To a Negotiated Agreement • Satisfies INTERESTS: • Ours, well INTERESTS ≠ POSITIONS • Theirs, at least acceptably • Others, at least tolerably • Leaves no joint gains on the table: is among the best of many OPTIONS • Uses LEGITIMACY: objective criteria or transparent processes allow parties to view mutual decisions as fair and sensible • Contains COMMITMENTS that are well-planned, mutually understood, and operational • Is reached efficiently with effective COMMUNICATION • Builds a good working RELATIONSHIP among the parties

38. Conflict outcomes I want you to: Lose Win 1 2 Lose Lose- Lose Lose-Win 3 4 Win Win-Lose Win-Win I want to:

39. Thank You Thank You Wish You All The Best