Communication and Personality in Negotiation

Organizational Negotiations – MGT/445

Communication and Personality in Negotiation

People negotiate in their professional lives and personal lives more frequently than they may realize. Negotiating is a win-win situation in which the parties involved attempt to find a mutually acceptable solution to a conflict (Lewicki, Barry, & Saunders, 2006). Negotiating is a critical skill to understand and apply because of the frequency in which it is used and the potential effects of the outcome. Communication and personality play vital roles in how the negotiation begins, unfolds, and concludes. Reviewing a business negotiation conducted in early 2010, followed by an analysis of the roles of communication and personality will create a guide to understanding and improving future negotiations.

Negotiation Situation

            AAA Company is the leading provider of payroll, human resources, and time collection solutions to businesses across the globe. With its stellar service and products, AAA Company is a more expensive provider, and because of a challenging economy, many businesses have begun leaving AAA for lower-cost providers. To stop the flow of clients leaving due to higher prices, AAA began proactively reaching out to its largest accounts and negotiating a discounted price in return for a long-term service agreement.

            Meat Market was one of the accounts contacted in February 2010. Stephanie, Executive Manager for AAA called Victor, Chief Financial Officer (CFO) of Meat Market, and asked if he would be interested in a cost reduction. With over $400,000 in annual revenue, Stephanie did not want to lose Victor’s business, and with the Meat Market expanding rapidly, Victor wanted to reduce his payroll expenses. Stephanie approached the negotiation with the integrating conflict style, whereas Victor approached the negotiation with the dominating conflict style. 

The negotiation began with a meeting in Victor’s office in early March. Stephanie brought a proposal of a three-year service contact in return for a 7% cost reduction. Instead of discussing the proposal, Victor spent the meeting criticizing the payroll service and insisting that AAA cheated him out of money for the past year with incorrect bills. Stephanie left with a list of his concerns and returned the next week with answers, including documentation proving that his billing was correct. During the time Stephanie had spent gathering the answers to his concerns, Victor held meetings with other payroll providers to see what they had to offer.

In their second meeting, Victor had little interest in hearing the answers Stephanie had found to his concerns and instead focused on the pricing proposals he had received from the other providers. The pricing from the other providers appeared lower than the proposal. Victor asked for a 10% discount with a two-year agreement. After reviewing the proposals, Stephanie found that other provider’s pricing was higher than AAA because of inaccuracies and missing items on the quotes. Stephanie returned to Victor for a third meeting in which she explained the pricing quotes from the other providers compared to AAA’s proposal. After several more meetings, to entice Victor to commit and show AAA’s value in their partnership, Stephanie increased the offer to a 9% discount in exchange for a five-year service agreement.

After more than two months of negotiation, Victor signed the five-year agreement with a 9% discount. In the five months since the agreement, the Meat Market has opened an additional 14 stores increasing its business with AAA, and the Meat Market saved over $36,000 in payroll fees. In the end, both companies benefited from the negotiated terms, and Victor and Stephanie left satisfied with the win-win agreement.

Roles of Communication

 “Communication processes, both verbal and nonverbal, are critical to achieving negotiation goals and to resolving conflicts” (Lewicki, Barry, & Saunders, 2006, p. 162). In the AAA and Meat Market negotiation, communication was essential, and both Victor and Stephanie were senders and receivers of communication throughout the process. In the first meeting, Stephanie communicated her goals and objectives, but found that Victor had a much different idea on how he wanted to reach his objective. Stephanie preferred upfront communication in which all negotiating parities brought honesty and full disclosure. Victor preferred to communicate only small amounts of information at one time and not reveal his full intention. This made communication difficult because with each correspondence, Stephanie wondered what Victor meant and if he was withholding valuable details.

Another challenge in communication was that Stephanie preferred communicating via e-mail, whereas Victor preferred face-to-face meetings. Stephanie liked to have everything in writing through e-mail and found Victor’s approach time-consuming and ineffective. As the negotiation progressed, not obtaining a written account of everything discussed in the meetings led to misinterpretations and misunderstandings. Stephanie’s normal negotiations with clients last around two weeks, but due to the challenges in communication, the Meat Market negotiation lasted more than two months.   

Roles of Personality

The differences in Stephanie and Victor’s personalities directly affected the conflict style each person chose and affected the outcome of the negotiation. Stephanie’s collaborating style was both high on assertiveness and cooperativeness, but Victor’s competing style was high on assertiveness and low on cooperativeness. Victor’s low cooperative tendencies coupled with Stephanie’s predisposition for high cooperativeness led to the eventual outcome in which Victor received a higher discount than Stephanie originally offered. Victor and Stephanie also had different social value orientation, as Victor was primarily pro-self whereas Stephanie was pro-social According to Lewicki, Barry, and Saunders (2006), pro-self means being primarily concerned with personal outcomes and pro-social means being concerned with an outcome benefiting everyone involved. 

Victor’s accusation of AAA cheating him out of money in the first meeting set the stage for Victor to demand more of a concession. Throughout the negotiation, Victor’s dominating personality and lack of cooperativeness made Stephanie unwilling to concede as much as she would have if Victor had cooperated. Stephanie could have granted a 15% discount or more, but because of the conflict in personality, Stephanie did not want to give Victor the satisfaction and held him to a 9% discount. If their personalities and conflict styles worked better together, Victor would have received a larger discount.

Conclusion

            The AAA and Meat Market negotiation is an interesting case in which both parties received a win-win solution, but communication and personality impeded the process. Stephanie approached the negotiation with the integrating conflict style,- whereas Victor approached the negotiation with the dominating conflict style. The difference in communication style and personality set the foundation for the challenging two-month negotiation that ended with a compromised agreement. Although challenging, the AAA and Meat Market negotiation was a success.

Reference

Lewicki, R. J., Saunders, D. M., & Barry, B. (2006). Negotiation (5th ed.). Boston: McGraw Hill