Insights into negotiations: to negotiate or to bargain? The big question for policy makers and business leaders (I)

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Negotiations
Professor Douglas BOATENG

Negotiations are increasingly becoming an important tool for sustainable economic growth, industrialisation and national development in especially developing economies. Today, success in business and societal development is determined by the transaction advisor’s or policy maker’s ability to negotiate.

It is therefore not surprising that having an effective understanding of the role and impact of negotiations is no longer overlooked by public and private sector professionals and policy makers focused on the UN sustainable development goals.

As Tracy B. (2019) rightly pointed out “if you cannot negotiate, you automatically become a victim of the people who are better than you in negotiating”

Put simply negotiations occur when different parties come together to reach some sort of end goal. This end goal should ideally be agreeable by all parties. During the process, one party will usually present their wants or needs. The other parties involved will then put their own positions forward. If the positions are acceptable to all parties, they will be accepted. If not, the parties will negotiate until a resolution is reached.

To Docherty J.S. (2005) Tracey B. (2013), Rossiter T. (2013) Cooper-Ind C. (2019), Benoliel M. and Hua W (2021) negotiations is a means:

(1) to recognise each other’s needs and requirements,

(2) for individuals or organisations to actively engage in dialogues aimed at developing mutual understanding and agreement.

To Weinstein S. and Weinstein S. (2017) negotiation is nothing more than communication with different starting positions……but with a mutually beneficial resolution as the end goal…”

Horton S (2017) succinctly describes negotiations as “a process through which two or more parties come to an agreement on an action to be carried out”.

Negotiation as correctly explained by Rossiter T (2013) is something done every day…….” Sometimes it does not have to involve contracts or business deals…….it might just mean agreeing a deadline for a task sorting out office space……”

According to the Supply Chain Resource Cooperative, “Excellent negotiation skills not only influence the outcome of individual transactions, but also relationships with various stakeholders and business associates.”

The common theme among all the definations is the fact that there is an engagement between parties in order to achieve a common understanding of needs and requirements.

Negotiations is not always about reaching an agreement. Sometimes parties agree to disagree and terminate the discussions. Termination of discussions is a form of a negotiated agreement

While a recent research study into director level perspectives of supply chain negotiations conducted by PanAvest International and Partners revealed a clear understanding of the need for negotiation skills and experience for socio-economic development, misunderstandings related to the exact nature of negotiation emerged. The study also highlighted the increasing differences between bargaining and negotiations.

Bargaining is simply about haggling for the best possible deal or outcome from an engagement. In most cases bargainers tend to focus on attaining goods or services for the cheapest possible price and are focused purely on ‘winning.’ This focus on winning leads to win-lose relationships between competing individuals or organisations and hampers the development of long-term mutually beneficial relationships.

In Africa, governments, policy makers and executives often underestimate the value of what they have and therefore end up placing too much focus on short term gains, without taking the intended and unintended consequences of this short-term thinking into consideration especially when it comes to the impact that short-term bargaining has on long-term business, shareholder and societal interests

In short, bargainers tend to be short-term, win-lose hunters who are less knowledgeable in terms of value chain creation and less confident in their individual, organisational or national worth.

In order to reverse current trends, it is important that public and private organisations avoid short-term bargaining practices and instead negotiate for long term success.

Successful negotiations result in win-win relationships for all of the parties involved, and ultimately lead to long-term contracting benefits. In Africa, misunderstandings relating to the concept of negotiation continue to abound, and bargaining tends to dominate relationship development discussions. A relative lack of negotiation on the continent is not only hampering the sustainability, competitiveness, and growth of local businesses, but also has a negative impact on region-wide service delivery, organisational value chain performance, and broader socio-economic developmental imperatives.

Horton S. (2017) and the Supply Chain Resource Cooperative further notes that “One common misconception of negotiation is that one party has to win, while the other party loses. This idea is inconsistent with the meaning of negotiation. A commonly agreed upon definition of negotiation is a process of compromise by which the needs of different parties are managed.”

According to Weissman R, and Tracy B. “Negotiation is not just about price, but about managing and improving overall relationship arrangements and measurable performance.” Both further highlights that “negotiation is an underutilized, yet critical business skill that lies dormant within most organizations.”

Negotiating as rightly pointed out by Benoliel M. and Hua W (2021) is a learnable skill which can be developed over time. Effective negotiators today focus less on winning or losing and more on coming to a compromise that benefits all parties involved in the negotiation process. They also enter engagements with confidence and from a position of knowing the intrinsic value of what they have and what value they want for it. They are long-term driven and are focused on creating win-win relationships between participating organisations. At the same time, they are prepared to walk away from negotiations if the deal is not in the long-term interest of all of the parties involved.

In a win-win negotiation, both parties can compromise so that each side captures some level of value. Win-win negotiations in a relationship-based environment take on a long-term approach with a balance of success for both sides over time” posited Weissman R

In summary when you know what you have and what you want you enter into discussions to negotiate and not to bargain .

To conclude, negotiations is about compromising, trading, minimising conflicting and competing wants and needs to ensure the best possible outcomes for the parties involved. To achieve this, negotiation professionals across Africa should avoid bargaining for short-term benefits and rather negotiate for long-term gains.  Not only will a shift towards negotiation facilitate organisational success and value creation, but it will also help to move Africa’s long-term industrialisation and developmental agenda to be in line with the UN sustainable developmental goals and agenda 2063.

>>>the writer is an international chartered director and Africa’s first-ever appointed Professor Extraordinaire for Industrialisation and Supply Chain Governance.   He is the CEO of PanAvest International and the founding non-executive chairman of MY-future YOUR-Future and OUR-Future (“MYO”) and the highly popular daily Nyansa Kasa series. He is currently the non-executive chairman of the Minerals Income and Investment Fund (MIIF). Professor Boateng was previously the non-executive chairman of the Public Procurement Authority (PPA). For more information on Nyansakasa visit www.myoglobal.org.

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