Psychology of Negotiation Essay

Abstract Every day we may negotiate with people many times without being aware of it. The social reality is actually a big negotiating table, and we are playing a variety of negotiators in different situations. In the community, you might have conflict with others, and in order to solve these conflicts, you need to negotiate. Negotiation, to some extent, is a psychological game. So if we have the knowledge of it, we can make a good deal. This paper talked about the significance of studying psychological of negotiation, people’s different needs, motives, and temperaments in negotiation which could help negotiators to make successful negotiations with knowing them. Also, how to deal with the emotion problems people may have during negotiations. Negotiation is an indispensable part of our daily life, because it happens in our lives almost every day. Once we get rid of negotiation, we’re going to lose many of our rights, and right then it’s hard to express our true thoughts, and even if there are conflicts of interests, we can not protect our own benefits. In essence, the direct reason that lead to negotiation is the demands of negotiating parties, or the demand of the organization that one represents, can not be ignored when the other party meet their demand. Therefore, the main purpose of two parties participating in a negotiation, are not only to pursue their own needs, but also to find an acceptable solution for both parties through the exchanging of views and consulting. Former U.S. President John F. Kennedy had a famous saying in his inaugural speech, â€Å"let us never negotiate out of fear, but let us never fear to negotiate.† On some level, negotiation is a mental game. We can learn from psychology that people’s needs, motives and behavior are closely related. What in a person’s mind affect his behavior, so psychology of business negotiation has important impact on the behavior in negotiation. Using psychological knowledge in negotiations will help people win the game. Psychology of business negotiation refers to various mental activities of negotiators in negotiations. It is a subjective reflection of negotiators towards variety of situations, conditions and other objective facts in negotiation. For example, when negotiator first meets the opponent in negotiation, and if the opponent is polite, sincere, and easy to communicate, the negotiator will has a good impression toward the other, and  he will be more confident and hopeful to make the deal. Being familiar with psychology in negotiation, will help negotiators handle a variety of complex negotiation problem flexibly and efficiently. I t is also significant for negotiators to develop excellent psychological quality, maintain a good attitude, judge the opponent’s psychological states and motives correctly, and predict and guide opponent’s behavior. The negotiator’s self-confidence in making negotiation successful, the sincerity towards negotiation, the management and control of emotion in negotiation, and the prevention and handling with obstacles are indispensable psychological qualities that guarantee successful negotiation. Therefore, negotiator should develop and improve their own excellent psychological qualities, and abandon the bad psychological behavior. The secret of negotiation is to grasp each other’s needs. Demand is the core of the negotiation. Needs and meeting the needs is the common basis for negotiation. For example, I have my own needs and the ability to satisfy others, and others have their own needs and the abilities to satisfy my needs. Therefore, we can satisfy each other, and this becomes the common basis of negotiation. Demand is a subjective state when one lacks something, which is a reflection of the needs of the people of a certain objective things, and that the objective needs of nature and society reflected in the brain. The demands in negotiation have several types: 1. Physiological needs: the original, basic, necessary needs for human survival, such as breathing, eating, drinking, sleeping, etc. No matter how tight, intense the negotiation is, the personnel participating in the negotiation must ensure to meet the physiological needs. The better we set up the dining, resting and entertainment in the negotiation, the higher the efficiency of negotiation is going to be. On the contrary, if people’s physiological needs can be satisfied, the negotiation can be directly affected. 2. Security needs: mainly refers to a person’s sense of security, stability and order. Business negotiators have strong security needs. To consider the credit security, the negotiators usually like to deal with old customers, and they feel scruples in dealing with new customers. In business negotiations, negotiators are generally concerned about the risks in transactions. For negotiators that are more sensitive, they would worry the condition of the main qualif ications, property, funds and reputation of the opponents. Sometimes they prefer to give up the attractive large  transactions, to select more solid small transactions or even give up the transaction. 3. Social needs: mainly represent the needs to seek and improve interpersonal relationship. Business negotiators have social needs. Negotiations are typical social activities. In a society that economy and culture are well-developed, people’s activities show their social needs. Social needs is a delicate and subtle needs, and it is related to one’s personality, psychological characteristics, experiences, cultural upbringing, habits, and religious beliefs. 4. Esteem needs: including being respected and self-esteem. To embody it is to hope one himself or herself having ability and achievements, be qualified for a job, be eager to get the appreciation of others, fame and glory. This kind of psychological needs showing in negotiation is that some people like to show their identity and authority, or others like to listen to people’s compliments and so on. The person who has a strong esteem needs might has aggressive and hostile behavior, or does not like to cooperate because of the working of psychological defense when his or her does not feel to be respected or the pride was hurt, and this will bring a big obstacle to negotiation. U.S. Oil Consortium would like to buy natural gas in Mexico with low price, so they had a negotiation about the price. The U.S. energy secretary believed that there was no potential buyer and Mexico would lower the price eventually since it was just a negotiation about money. However, the Mexicans needs w ere not only just selling natural gas at a good price, but also being respected and equal. And the Americans’ behavior looked like a bully for Mexicans, so the Mexico government decided not to burn the natural gas to the ground instead of selling to the U.S.. Therefore, any chance of making an agreement in politics is impossible. The case shows us that people may withdraw from the negotiation or give up the original plan of conducting transactions in order to safeguard the prestige and dignity. 5. Self-actualization needs: Self-actualization is to make one’s potential getting realistic. When you make the efforts to let others give you the special privilege, your satisfaction may reach a peak, and this is the representation of self-actualization. In actual negotiations, a strategy that people always use is to give the lowest offer, which is using this psychological phenomenon. â€Å"This is our best price†, is a typical example of using the psychology of pursuing self-actualization. In many circumstances,  negotiators are not on behalf of themselves, but on behalf of the organization to participate the negotiations. While they are trying to meet the individual needs, they also have to consider about the needs of the group or the organization. As a negotiator representing an organization, from the view of ethics, the needs of the organization should be put in the first place. One should try to satisfy the needs of group or organization through hard work. Where there is a need, there is a motive. Motive is the internal power to promote people to meet the needs. In other words, it is an internal driving force to promote people to do activities. The motive of negotiation is the driver to promote negotiators to make a negotiation to meet their needs. â€Å"Social motives determine negotiators’ preferences for resource allocation, that is, wheth er negotiators’ focus on maximizing collective or personal outcomes.† (Olekalns, M. & Smith, P.L., Jan, 2012) There are four-type motives of negotiation. 1. Economy-type motive: This kind of motive refers to that the negotiators are very sensitive to the economic factors such as transaction price and they take economic interests seriously. The negotiating behavior is mainly driven by economic interests. 2. Impulse-type motive: This means that the negotiators are impulsive in decision-making in negotiations, and their negotiating behaviors are induced by their emotions like irritation. 3. Misgiving-type motive: This means that the negotiators’ behavior is affected by suspicions and worries to cause the discreet negotiating behavior. 4. Adventurous-type motive: This means the negotiators like to take risks to pursue a more perfect outcome. Their negotiating behaviors are triggered by risks. When people have some kinds of needs but not be satisfied, they will have a nervous state of mind, and when they encounter the goal that can meet their needs, the nervous state of mind will turn into motives, to promote people engage in certain activities and achieve the goal. As a negotiator, one should have the insight to know the other party’s needs and motives, and adjust the negotiating strategy in order to have the control of negotiation. In business negotiation, the negotiators’ characteristics and personalities also have important impact on their negotiating behavior. â€Å"Personality clashes created via ‘posturing’ and ‘saving face’ can block progress in  negotiations.† (Hoffman, E., Dec, 2012) Personality affects the style, efficiency and effectiveness of negotiation. 2500 years ago, the ancient reek physician Hippocrates believed that the human body was filled with four basic substances, called humors. The four humors were black bile, yellow bile, phlegm, and blood. (Wikipedia, the free encyclopedia) The four humors form the four types of temperament. The negotiating personality of each temperament is power-type, convince-type, execute-type and misgiving-type. 1. Power-type: Power-type negotiator is a competitive opponent in negotiation. If you obey him, he will â€Å"eat you up†, and if you resist him, the negotiation will come to a dead end or be terminated. The best way to deal with this kind of people is to overcome hardness with softness. When they are furious or try to force one to make a deal, do not rush to refute or give it back, one should try his or her best to avoid direct conflict face to face, and be patient to listen. When the conflict is inevitable, one shall not surrender. One should use the facts to prove they were wrong, and fight back calmly. When you speak for the truth, they will be cool and may have respect and admire for you. It’s good to satisfy their self-esteem, stimulate challenge, make obstacles and induce risks to make the negotiation succeed. 2. Convince-type: The most common negotiators are convince-type in negotiation. They are shrewd, cautious, affable in appearance, and full of charm. They are good at discover and cater the opponents’ interest, and convince people gradually. Under many circumstances, even if they do not agree with other parties’ proposals, they would not refuse directly, and they always try to convince the other parties or illustrate their reason why they do not accept. The best way to deal with this kind of people is to persuade them repeatedly, because they like to hear from others and love to take advices. As long as your products fit their needs, and the price is reasonable, they will take it eventually. In addition, they are concerned about relationships, and they do not like making conflict, so repeated persuasion will be very effective. It’ll be good to make small conflicts and prepare some compliments and many questions in details to make the deal quick in negotiation. â€Å"It’s a fact of life that dealing with an intelligent well-balanced person will be the toughest negotiation, but it also offers the prospect of creating a genuine â€Å"win-win† agreement in the shortest possible time.† (Palmer, A., 2006) 3. Execute-type: The negotiators have  this kind of temperament can not work independently in negotiations. They like to play by the rules and implement with the plan in advance toward superiors’ orders and instructions. They usually do not have their own ideas and insights, and they lack of the ability to think and imagine. They often have poor decision-making and adapting ability. Trying to keep the status quo as it is is their greatest wish. The most effective way to deal with this kind of people is to be calm, patient and try to use more detailed information and precedents. They like safe and orderly negotiation. As far as possible to negotiate as planed when they are your opponents. They are concerned about the details, so try to show more information to support your idea and gain their trust. It’s good to divide negotiation to some periods with specific goals, and try to speed up the process of negotiation. 4. Misgiving-type: This kind of opponents have strong security needs and risk awareness. They always have scruples when dealing with new customers. They are worried about having disadvantage and being cheated, so they are anxious for gains and losses, sensitive, suspicious, defensive, close-minded and critical. They like to spy on their opponents’ minds, so it is advised to take a moderate negotiation with them. The effective way to deal with them is to provide more witnesses, evidences and other proofs. This kind of opponents is very suspicious. Whatever you say, they want to confirm to be assured. If you fool them with one answer, it seems to be impossible to gain their trust again. You have to be honest and passionate with these people. It is good to be cautious with your behavior, give them time to consider, make small conflict when they are doubted with the apparent facts. Therefore, when we observe and understand the opponents’ types, we can accept their shortcomings and deficiencies calmly, and take effective measures according to their psychological characteristics to control the direction of negotiations. Although we know the types of people we are going to deal with in negotiations, everyone has emotions that may blow off the negotiations. Business negotiations are complex and variable, and both parties’ emotions may fluctuate with the process of negotiation. Being too emotional is not good for negotiation. â€Å"The most successful negotiators are able to rise above the emotional aspects separating the people from the tasks.† (The Psychology of Negotiation) We have to make effective regulations on emotions of each party, we can make the negotiations proceed  in the way we expected. Negotiators should have self-control of their emotions. Whether the negotiations are going well or bad for their own party, they should be ratio nal rather than being manipulated by the opponents. â€Å"Mueller and Curhan found that negotiators with emotionally intelligent opponents were more satisfied with the negotiation outcome, liked their partners better, and were more willing to engage in future negotiations with the same partner than those negotiators with opponents who did not understand emotion as well.† (Gelafand, M.J., Fulmer, A. & Severance, L.) Sometimes people can use good-cop, bad-cop strategy to control the opponents in order to make the deal. U.S. tycoons Howard Hughes once wanted to buy a fleet of aircraft. Because he wanted to purchase a huge amount, it was a very good deal for the manufacturers. But Hughes stated that he wanted to write down his specific requirements on the agreement which were 34 clauses totally, and the manufacturer had to fulfill 11 clauses of the requirements. Hughes’s attitude in the negotiation is domineering, and hard-lined. He refused to consider about others, which aroused the anger of the manufacturer. At last, the m anufacturer announced that they would not have any negotiation with him. So later, Hughes sent his private representative to come forward to negotiate, and finally they made the deal with fulfilling 30 clauses of the requirements. But how did the representative win the negotiation? The answer is simple. Every time they had a conflict, the representative would ask, â€Å"Who do you prefer to settle this problem with, me or Howard Hughes?† So they eventually made it work by playing â€Å"good-cop and bad-cop†. Negotiation is an activity we may have to participate almost every day. Where there is a conflict, there will be a negotiation or compromise. However, we could use psychology to analysis people’s minds and behavior in negotiation to help us make a successful negotiation. Reference Hoffman, E.(Dec.2012). For dealing with the psychological factors that can block progress in negotiations. Retrieved from http://www.ciian.org/assets/forms/negotiation.pdf Homorism. Wikipedia, the free encyclopedia. Retrieved from http://en.wikipedia.org/wiki/Humorism Gelafand, M.J., Fulmer, A. & Severance, L. The psychology of negotiation and mediation. Retrieved from http://www.bsos.umd.edu/psyc/gelfand/GelfandFulmerSeverence.pdf Olekalns, M. & Smith, P.L..(Jan,2012). Psychological aspects of negotiating strategies and processes. Melbourne Business School. Retrieved from http://works.bepress.com/mara_olekalns/20 Palmer, A. (2006). Psychology and Negotiation. Negotiation. Retrieved from http://www.negotiation.biz/psychology.htm The Psychology of Negotiation. Training, LLC. Retrieved from http://www.champtrainer.com/documents/the_psychology_of_negotiation.pdf