The power in negotiations

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Negotiations happen in organizations, for example in job offers (which many of you might get soon) or between organizations, like the I-merger stimulation we had. Most often, these negotiations happen between two parties who hold different power relations. However, whether power affects these negotiations depends on which strategy is taken.

Structural approach to negotiations and it limitations

If you subscribe to the idea of “the one who has more power will win”, you are taking the structural approach to negotiation theory (Alfredson & Cungu, 2008). Power here can come from French and Raven’s five power bases: legitimate/positional power, coercive power, reward power, expert power and referent power.

Your potential boss during job offers has legitimate, reward and coercive power, he or she is of a higher authority and can be seen as having more resources than you. He/she also has ability to provide or take away potential benefits (vacation days, salary etc.). Similarly, smaller organizations in negotiations have less actual power because they have fewer resources and not as much financial capital as compared to their bigger counterparts.

The theory thus predicts that the strongest will always get what they want (in this case potential bosses/ bigger organizations) and win at the expense of the weaker party, but this of course is not always true. This theory focuses too much on hard power, and does not take into account other types of power like negotiating skills, alternatives and tactics that could be wielded by a weaker party (Alfredson & Cungu, 2008). There have been findings that show such power like resource power has no direct relationship with negotiated outcomes, and asymmetrical negotiations do not always lead to the strong exploiting the weak (Rubin & Zartman, 1995).

What can the weaker party do?

1)      Using tactics, like coercion, opening strong and even anchoring effects (aiming higher and then negotiating downwards) (Ashong, 2011). However, some of these tactics may not be recommended or effective, especially coercion (using force or threats on people is generally not a good idea).

2)      Using the other power bases, like expert power, referent power or informational power. These other sources of power are available to weaker parties since they are not fixed. One can always increase their expert and informational power (knowledge is power!), or work on their referent power to create bonds to facilitate the negotiation (Lewicki, Saunders, & Barry, 2010).

3)      Using alternatives, specifically the Best Alternative to a Negotiated Agreement (BATNA). As the name implies, BATNA is simply the best alternative one has in case the current negotiation does not work out, and it is one of the biggest power source for negotiators. Knowledge about everyone’s best alternatives before and during negotiations can be important, because a BATNA can be used in favour of a weaker party. For example, another job offering $3000 starting pay can be your BATNA, and the current negotiation should not be below this. A strong party can have weak BATNAs (e.g. few job candidates to choose from), rendering the strength of the party irrelevant. Knowing your own BATNA allows you a clear knowledge of what you can negotiate with and avoid mistakenly giving in to the stronger party without realising there are better alternatives, or even wrongly rejecting offers from them too (Alfredson & Cungu, 2008).

Power in negotiations does not have to be about actual power, but also perceived power, and these power relationships can change over time as well. The stronger party’s initial power may not hold out during negotiations if the weaker party uses tactics and alternatives to change their power status.

Pushing power aside

Sometimes stressing power isn’t the best for negotiations. While structural approaches are win-lose situations, integrative approaches are win-win situations. There are 4 steps to an integrative approach (Lewicki, Saunders, & Barry, 2010).

  1. Identify and define the problem
  2. Understand the problem and bring interests and needs to the surface
  3. Generate alternative solutions to the problem
  4. Evaluate those alternatives and select among them

Here the concern is not about power, but they stress working together, sharing information and creating more value for both parties (Alfredson & Cungu, 2008). I learnt about this approach during another module, where we did the ‘New Recruit’ negotiation exercise. The goal of the exercise was to get as many points as possible during a negotiation between you and another person (it’s a bit lengthy to explain, so I highly recommend trying it out/ reading about it!).

 

Although the integrative approach can create value for both parties (regardless of power), it might not work all the time. It needs cooperation, effort and time. These factors may not be present in all negotiations, which is why sometimes power still plays an important role.

 

P.s. Thanks Prof for your helpful and fast emails!
References:

Alfredson, T., & Cungu, A. (2008, January). Negotiation Theory and Practice A Review of the Literature . Retrieved from EASYPol : http://www.fao.org/docs/up/easypol/550/4-5_negotiation_background_paper_179en.pdf

Ashong, M. (2011). The Hidden Strength of a Seemingly Weaker Party: How Negotiators from Developing Countries can learn from the Negotiation between MCC and KJH. CEPMLP Annual Review.

Kellermann, K. (n.d.). Power is the essense of negotiation. Retrieved from ComCon Kathy Kellermann Communication Consulting: http://www.kkcomcon.com/doc/KPower.pdf

Lewicki, J. R., Saunders, D. M., & Barry, B. (2010). Essentials of Negotiation. McGraw-Hill.

Rubin, Z. J., & Zartman, I. W. (1995). Asymmetrical Negotiations: Some Survey Results that may Surprise. Negotiation Journal, 349-364.

 

Age differences and employee engagement

During the last lesson on engagement, we covered some factors that encourage employee engagement in the workforce, such as task variety and significance and employee voice. However while researching more about employee engagement, I came across this research article by Zaniboni, Truxillo and Fraccaroli (2013) that noted the differences between younger and older workers in relation to task variety and skill variety in engaging employees. It occurred to me that the different ways to increase employee engagement tended to focus on the average employee, and not on age diversity. Many concepts are thus applied generally and the effects of age has not been looked at. It could be that different characteristics of jobs could benefit employees differently, depending on their stage in life.

Why should we bother age?

Well at the start of the module we noted that diversity in the workforce is changing, and this includes age diversity. The ageing workforce is becoming a reality, and it should be important to know the effects of these theories on age too because it has positive benefits on employees. As covered in class, employee engagement not only increases task and conceptual performance, but reduces stress and sick days and increases commitment to the organization. As such, I have looked at four different studies to see how some factors of employee engagement has different impacts on employee’s age.

Differences in perceptions of work

The reason for the distinction can be due to both psychological and practical differences regarding work for younger and older employees. Some researchers have found how younger workers are more future orientation and look for knowledge acquisition because this can further their careers. On the other hand, older workers (who has already acquired knowledge and experience in their years of working) are more present orientated and are more selective with their resources used (Zabiboni et al., 2013). Older workers also have some preconceived notions that they are not supposed to be working or are just simply waiting until they retire, and as such might be less engaged (James et al., 2011). Older workers are also more concerned with maximizing positive emotions and social experiences (Zabiboni et al., 2013).

Factors in engagement and age

Across the few studies I have looked at, there are significant differences in the factors of employee engagement and age. Firstly, I previously mentioned how task and skill variety has an effect. It was found that age is a moderating factor for the relationship between task variety and burnout/ turnover, the relationship between skill variety and turnover. This is summarized by the figures below.

1 2

Thus, younger employees prefer task variety and older employees prefer skill variety. Younger workers see task variety as a way to develop job skills to advance their career. On the other hand, older workers who have already acquired these skills want to be able to apply their skills. This will lead to better engagement and decrease in turnover and burnout.

The second paper by James et al., (2011) shows how some factors can effect employees more depending on their age. James looked at four influences: supervisor support and recognition, schedule satisfaction, job clarity and, career development and promotion. While all these promote engagement in employees, they have different consequences depending on age. While the first 3 factors have a significant influence on employees regardless of age, supervisor support and recognition has a bigger impact for those who are approaching or eligible for retirement. The last factor affects all age group except those who are eligible for retirement.

Summary of factors affecting employee engagement in older and younger employees

Summary of factors affecting employee engagement in older and younger employees

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Implications

These studies have indeed shown how age diversity can have different effects on employee engagement, and there is a need for further distinction between engaging older employees and engaging younger employees. There might be no one size fits all approach to employee engagement. Employers need to have knowledge about the underlying differences in working conditions between younger and older workers in order to effectively engage their employees. It will also be useful to note some similarities in the factors. For example, supervisor support and recognition, schedule satisfaction and job clarity can increase engagement in both types of workers, leading to easier implementation of policies or practices for leaders. One can see the benefits of having these different distinctions in both a theoretical and practical way. It will be helpful to see other differences between younger and older workers in future research.

Thanks for reading!

References

James, J. B., Mckechnie, S., & Swanberg, J.   (2011). Predicting employee engagement in an age-diverse retail workforce. Journal   of Organizational Behavior, 173-196.

Pitt-Catsouphes, M., & Matz-Costa, C. (2008). The   multi-generational workforce: Workplace flexibility and engagement. Community,   Work & Family, 215-229.

Zaniboni, S., Truxillo, D. M., & Fraccaroli, F.   (2013). Differential effects of task variety and skill variety on burnout and   turnover intentions for older and younger workers. European Journal of   Work and Organizational Psychology, 306-317.

 

 

How does industry affect culture?

A lot has been said about where culture comes from and how it is sustained. Most of the emphasis seems to be placed on the founder of the company- they seem to be the main source of a company’s culture. If not the founder, culture is said to come from within the company, formed by the people of the organization. However, I think there other forces that guide the formation of culture, such as the industry the organization is in.

Personally, I thought that certain types of industry would require certain types of culture. For example, technological companies such as Google or Apple would require a culture of innovation, or that Airlines would a culture of safety to work in. Different industries would place more or less stress on certain values. Changes in industry may also lead to changes in companies too. It seemed reasonable to think so, but the textbook had no mention of it and I thought industry would be an interesting factor to look into. At the same time, I realized that many different companies from the same industry could have completely different but successful cultures. A good example would be one covered in class, Southwest Airlines. Compared to other Airlines which seem more professional, Southwest’s “fun-luving” attitude is a stark contrast among them (the way they spell “love” is already a good indicator).

Just a reminder on how Southwest Airline's logo looks like <3

Just a reminder on how Southwest Airline’s logo looks like <3

 

So, I went to research how industry affects culture, and found this article that covers both culture formation and culture differences within an industry (although the latter is not extensively touched upon). The article can be summed up using their model on how industry-driven culture is formed as seem below.

Fig1

The industry requires basic assumptions that are shared among all organizations within it, which in turns affect the values of the company. These values should be consistent with the basic assumptions. An example given in the article was that of an electric utility company, with the basic assumption that customers need uninterrupted service. The company can diverge into different paths to fulfil this assumption: one could be to innovate and provide technology to ensure wide coverage; another could be to only serve customers in their reach. There are 3 assumptions covered in the article: Competitive requirement, customer requirement and societal expectations.

Competitive environment: More complex and dynamic environments will lead to culture of adaptability or a culture that deals with uncertainty.
Customer requirement: Can be said to be demands for novelty or reliability. Assumptions of novelty can lead to adaptation and adopting values related to change and diversity, while assumptions of reliability are hard to change.
Societal expectations: What expectations the society may have of the industry, for example, changes in people’s expectations of health and safety.

These 3 influences the basic assumptions in an industry and provides a basis for culture. If there is environment change, past behavior become ineffective, which causes the company to change. I think this can explain why some companies with strong culture fail. As the environment changes they do not adapt to it, and this leads to their failure. One example would be General Motors, who failed to cope with the new competitors and technology that surfaced.

This model also explains why companies from the same industry can have such a wide variety of cultures. As long as the basic assumptions are met, however the company chooses to work with it is up to other influences, like the founder of the company. So bringing it back to the airline industry, the assumption of providing safety for passengers could manifest in a professional or “fun-luving” way. Either culture could succeed in the industry as long as it doesn’t violate these assumptions. (For fun, here’s a video of a Southwest crew rapping the flight safety information: http://www.youtube.com/watch?v=pvdCFYLf_JI)

This model has indeed cleared up my seemingly inconsistent thoughts about culture and industry. Any comments or critique is appreciated! 🙂

References:

http://kottke.org/09/06/why-gm-failed

Gordon, G. G. (1991). Industry Determinants of Organizational Culture. The Academy of Management Review, 396-415.