Unit 3: Creating Value and Positive Outcomes
In this unit, we will uncover how to create value to ensure a successful outcome during the negotiation process. It is important to determine the value for both sides so that a win/win situation is planned for. Still, sometimes each side may need to learn what is valuable. Understanding all aspects of the negotiation process and what each side needs to determine a successful outcome is important. Sometimes you can create this value by understanding the important issues and using your communication skills to show that value. This process will help to ensure a positive outcome for both sides.
Completing this unit should take you approximately 8 hours.
Upon successful completion of this unit, you will be able to:
- examine the steps to develop a plan for a negotiation session;
- examine how to create value during the negotiation process;
- examine the stakeholders in the negotiation process; and
- evaluate the possible outcomes of a conflict.
3.1: Create a Plan for a Negotiation
Any negotiation needs a plan of action because knowing how you want the negotiation to progress and what you would like the result to be is important. The negotiation may go differently than how you want, but you have a better chance of success with a well-laid-out plan.
Creating a negotiation plan will allow you to consider the options, wants, and needs of both sides, consider any win-win options, complete any research you may need about the negotiation, and consider any alternative plans in case things do not go how you would like. Read this section and consider a negotiation you may have in the workplace. How did you work through the phases listed in this section?
The Best Alternative to a Negotiated Agreement (BATNA) is a strategy to consider when planning your negotiation process. You may find alternative ways to settle a negotiation by conducting your research before a negotiation. For example, when reviewing your car insurance policy, you may see that your rates have increased again for the second year in a row, even though you have had no accidents or claims. Then you find that another auto insurance carrier offers the same coverage for much less. Instead of moving your insurance from one company to another, you may use this information to negotiate a better deal with your current insurance company. This video about BATNA explains the process and how to use BATNA to your advantage when in the middle of a negotiation.
Every negotiation has potential outcomes, and most can be analyzed before the negotiation process even begins. Most likely, you know your ideal outcome and potentially the other side's, but alternatives for each side should be considered. While working through this process, you may discover that several possible outcomes may also work for you, so it is important to think through this process. This video explains the negotiation process and considers options for possible outcomes.
3.2: Creating Value in a Negotiation
Creating value in a negotiation means finding a solution that will end in a win-win situation or at least in a situation where neither party is worse off than when they began the negotiation.
Value can be created in numerous ways. A homeowner creates value when a kitchen is remodeled, which adds to its value. A recruiter creates value when offering their services to a job seeker, who the recruiter then places in front of a hiring manager. An innovative product that saves a person time and money or eliminates frustration creates value by creating a short video to show how the product might be used (an infomercial is one example of this). A manager who is good at persuasion might create value by emphasizing the importance of working on a particular project and what potential outcomes might occur. During the negotiation process, by understanding the wants and needs of each side, a good negotiator can create value by uncovering win-win situations and finding a solution that works for both parties. In this text, distributive and integrative bargaining are explained. How can you use distributive and integrative bargaining to create value during the negotiation process? Can you give examples of when you've done this in the past?
Part of the negotiation process is to converse with the opposition while attempting to discover wants and needs. During this process, you will naturally develop a relationship with the opposition, and this is an opportunity to build trust. This page discusses the concept of appreciative inquiry. As you read this section, consider how this would apply to those in negotiations. Keeping the conversations positively framed is an opportunity to build trust and uncover much-needed information. By approaching the conversation positively, you allow an open dialogue to gather information both sides need for better understanding and may lead you to a successful resolution.
By remaining flexible and open during the entire negotiation process, you allow for potential options that may have yet to be initially considered. Saying "no" each time an idea is presented is not how to remain flexible. Even though the presented option may not work for one side, that option could be the start of an option that, once finalized, works for both sides. By remaining flexible, you allow a basic idea to grow into a positive win-win resolution for both sides. When one or both parties cannot remain flexible, the negotiation process will stall or may not be resolved. This chapter gives a good overview of the entire negotiation process. This can help you understand when to decide to enter a negotiation or not.
3.3: Look for Win/Win Outcomes
A win/win situation is one where a conflict is resolved by both parties getting what they need from the negotiation. It is the ideal resolution for both parties and signifies that the negotiation has ended well.
Research is your best way of gathering information to help you better understand your negotiation. This research may come from various ways: conversations, interviews with those involved in the conflict, information about the companies or people involved, information about previous negotiations from either side, defining and clarifying needs and wants, current outside research about the topic, etc. Once this information is gathered and understood, the bargaining process can begin. This video explains the process of bargaining.
Collective bargaining occurs when a group of people negotiates needs. An example may occur in the automotive industry when a strike occurs because they need better benefits or higher pay. It is bargaining, but on a higher level because of the number of people involved. This page covers the basics of collective bargaining.
A win/win situation is ideal in any negotiation and occurs when both parties get what they want. A good negotiator will attempt to resolve an issue with a win/win situation every time. It may not always work, but it can occur during a good negotiation process. This video has a great example of a win/win situation and how two parties arrived at that point.
This video compares a win/win scenario in a negotiation and a win/lose scenario. A win/lose scenario is when one side wins, and the other side gets what they want or need. A win/lose situation can occur when one side has more power to control the outcome than the other. Or it may occur when one side is aware that they will lose something in the bargaining, but the option to lose may allow them to have additional benefits later, and they accept a win/lose resolution. Can you think of win/win, win/lose and lose/lose negotiations you've experienced? How would you describe the negotiation process in each one?
3.4: Stakeholders
Stakeholders are the people or organizations with something to win or lose in any negotiation. They have a stake in the outcome and are the people to ask about wants and needs.
Key stakeholders are the people or organizations who are the main decision-makers throughout the negotiation process. These people will determine what is needed in the negotiation process. Primary and secondary stakeholders may be other people involved in the negotiation process but are not the key decision-makers. The key stakeholders must be interviewed for wants and needs. Primary stakeholders are people or organizations that may be affected by the results of the negotiation. Secondary stakeholders may be those in charge of the negotiations or responsible for secondary functions resulting from the negotiation; examples might include banks, governmental agencies, or others. This section explains how to identify stakeholders and their responsibilities. Read the two case studies and answer the critical thinking questions.
Sometimes the stakeholders may use attorneys or mediators to get what they want, and the other side may never actually meet the stakeholders. Still, if possible, speaking with these people should be a goal to determine needs. Asking who the stakeholders are should be one of the first questions in the initial negotiation because these people (or organizations) have the answers to their bottom line and why they need what they need. A successful negotiation will include information from all types of stakeholders who may have a role in resolving the conflict, ensuring that the correct stakeholders have been interviewed to understand wants and needs. Read this section which includes information on discovering stakeholders' wants and needs. Read the case study and answer the critical thinking questions.
Unit 3 Summary
This unit covered creating a negotiation plan and using positive outcomes. By keeping the conflict in a positive light, you can keep both sides open to possibilities and a potential easy resolution. The next unit will cover creating value during a negotiation, bargaining, and using creative ideas to uncover win-win situations.
Unit 3 Study Resources
This review video is an excellent way to review what you've learned so far and is presented by one of the professors who created the course.
Watch this as you work through the unit and prepare to take the final exam.
- Unit 3 Review Slides File PDF document
You can also download the presentation slides so you can make notes.
We also recommend that you review this Study Guide before taking the Unit 3 Assessment.
Unit 3 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.