Introduction to Negotiation Strategy
At Oak Spring University, we provide corporate level professional Negotiation Strategy and other business case study solution. The Proposed Merit Pay Program: Should the Winners Take All? case study is a Harvard Business School (HBR) case study written by Thomas R. Miller. The The Proposed Merit Pay Program: Should the Winners Take All? (referred as “Merit Faculty” from here on) case study provides evaluation & decision scenario in field of Leadership & Managing People. It also touches upon business topics such as - negotiation strategy, negotiation framework, Compensation, Human resource management.
Negotiation strategy solution for case study The Proposed Merit Pay Program: Should the Winners Take All? ” provides a comprehensive framework to analyse all issues at hand and reach a unambiguous negotiated agreement. At Oak Spring University, we provide comprehensive negotiation strategies that have proven their worth both in the academic sphere and corporate world.
What’s my BATNA (Best Alternative To a Negotiated Agreement) – my walkaway option if the deal fails?
What are my most important interests, in ranked order?
What is the other side’s BATNA, and what are his interests?
Dr. Jeff Foreman, Professor and Chair of the Marketing Department at Carroll State University, had just left a meeting with the Dean of the College and other department chairs about the upcoming salary increase program. Since pay increases had been small in recent years, Foreman was quite pleased that there would be four percent merit money this year, in addition to the previously announced two percent across-the-board (ATB) increase. The ATB raise would be effective in July, and the merit pay would be implemented the following January. At the meeting, the Dean of the College informed the chairs that the merit-pay policy was subject to change, in order to reward the highest performing faculty. He stated that at a recent meeting with the Provost, the idea of a more "aggressive" approach to rewarding top-performing faculty members was discussed. This approach, it was advanced, would help the University retain its most productive and most mobile faculty members - those who had the talents to really advance the programs of the school. Subsequent discussion at the chairs' meeting was animated, and they expressed a variety of opinions about the advisability of the proposed changes in the merit-pay policy. As the meeting ended, the Dean asked each of the chairs to study the proposal and make a recommendation about the pay plan with a justification, noting that the group would meet again to make a policy decision for the College. Back in his office, Professor Foreman reviewed the existing policy on salary increases, salary information on his faculty, and their performance ratings for the last three years. He thought about the philosophy underlying the aggressive approach to compensation and the implications of rewarding only the top performers. But he also wanted to look at the actual impact of the proposed change on the salaries of his faculty members. What would it do to salary differentials? How would it affect faculty motivation?
By interests, we do not mean the preconceived demands or positions that you or the other party may have, but rather the underlying needs, aims, fears, and concerns that shape what you want. Negotiation is more than getting what you want. It is not winning at all cost. Number of times Win-Win is better option that outright winning or getting what you want.
Options are the solutions you generate that could meet your and your counterpart’s interests . Often people come to negotiations with very fixed ideas and things they want to achieve. This strategy leaves unexplored options which might be even better than the one that one party wanted to achieve. So always try to provide as many options as possible during the negotiation process. The best outcome should be out of many options rather than few options.
When soft bargainers meet hard bargainers there is always the danger of soft bargainers ceding more than what is necessary. To avoid this scenario you should always focus on legitimate standards or expectations. Standards are often external and objective measures to assess the fairness such as rules and regulations, financial values & resources , market prices etc. If the negotiated agreement is going beyond the industry norms or established standards of fairness then it is prudent to get out of the negotiation.
Every negotiators going into the negotiations should always work out the “what if” scenario. The negotiating parties in the “The Proposed Merit Pay Program: Should the Winners Take All?” has three to four plausible scenarios. The negotiating protagonist needs to have clear idea of – what will happen if the negotiations fail. To put it in the negotiating literature – BATNA - Best Alternative to a Negotiated Agreement. If the negotiated agreement is not better than BATNA then there is no point in accepting the negotiated solution.
One of the biggest problems in implementing the negotiated agreements in corporate world is – the ambiguity in the negotiated agreement. Sometimes the negotiated agreements are not realistic or various parties interpret the outcomes based on their understanding of the situation. It is critical to do negotiations as water tight as possible so that there is less scope for ambiguity.
Many negotiators make the mistake of focusing only on the substance of the negotiation (interests, options, standards, and so on). How you communicate about that substance, however, can make all the difference. The language you use and the way that you build understanding, jointly solve problems, and together determine the process of the negotiation with your counterpart make your negotiation more efficient, yield clear agreements that each party understands, and help you build better relationships.
Another critical factor in the success of your negotiation is how you manage your relationship with your counterpart. According to “Thomas R. Miller”, the protagonist may want to establish a new connection or repair a damaged one; in any case, you want to build a strong working relationship built on mutual respect, well-established trust, and a side-by-side problem- solving approach.
According to
Harvard Business Review
, there are three types of negotiators – Hard Bargainers, Soft Bargainers, and Principled Bargainers.
Hard Bargainers – These people see negotiations as an activity that they need to win. They are less focused less on the real objectives of the negotiations but more on winning. In the “The Proposed Merit Pay Program: Should the Winners Take All? ”, do you think a hard bargaining strategy will deliver desired results? Hard bargainers are easy to negotiate with as they often have a very
predictable strategy
Soft Bargainers – These people are focused on relationship rather than hard outcomes of the negotiations. It doesn’t mean they are pushovers. These negotiators often scribe to long term relationship rather than immediate bargain.
Principled Bargainers – As explained in the seven elemental tools of negotiations above, these negotiators are more concern about the standards and norms of fairness. They often have inclusive approach to negotiations and like to work on numerous solutions that can improve the BATNA of both parties.
Open lines of communication between parties in the case study “The Proposed Merit Pay Program: Should the Winners Take All?” can make for an effective negotiation strategy and will make it easier to negotiate with this party the next time as well.
Thomas R. Miller (2018), "The Proposed Merit Pay Program: Should the Winners Take All? Harvard Business Review Case Study. Published by HBR Publications.
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