Parties through effective negotiations can gain significant benefits. Significant mutual benefits can be gained by different parties be it on individual or organizational level through the use of effective negotiation skills. Negotiators play an important role in the process and can influence the outcome of negotiation. But how can they do this? Their brief article seeks to discuss how negotiations can create value or joint gains as well as examining the sources of such mutual gains. How do negotiators create value or joint gains?
Well there are three ways in which negotiators do create value. The first way is by facilitating agreements whose benefits outweigh the parties’ present possibilities. They create gains relative to the alternative. This means that they make it possible for additional benefits to be realized that would not have been realized if they were not in the picture. Secondly they (negotiators) find a negotiated outcome that the parties involved prefer with respect to another that is not equally preferable.
Thirdly they assist parties to realize that more gains are jointly probable than previously thought Lewicki & Litterer (1985) Where do mutual gains come from? Differences Gains may arise from inherent differences between parties. They could be differences in values beliefs opinions or interpretation of events and information that create the basis of negotiations. The nature of the differences could be categorized as follows: If the negotiating parties have differing combination of endowment this can create a foundation for a mutually beneficial exchange.
This is possible when either party values what the other has more than the value the owner attaches to the object. Similarly differences in the assessment of future events such as the future share price of certain stock. This may cause one party want to sell and another (believing the price will rise in the future) to buy. This creates a basis for negotiations. Thirdly differences in risk aversion may make one party consider an action or deal too risky while another would consider it a safe or good deal.
Gains may also arise from time preference where one prefers to a certain time for a certain activity more than any alternative. The undesired time may be preferable to the other party or else one party may be indifferent of the time factor and this difference creates basis for negotiation. Shared interests Apart from differences shared interests could be sources of mutual gains. There are two distinct ways how this is possible. The first is when there is a common across a range of settlement.
For example desired and common value between parties could be improved relations between them or fairness. (This may be used to decrease the magnitude of conflict) The negotiator can point out to them shared value and the parties are likely to reconsider their position. Secondly shared interest could result to gain if the parties prefer an identical position, For instance a divorcing couple where one spouse really wants the custody of children while the other desires to be absolved from responsibility. It could then be easy to reach a mutually desirable goal.