Winning Ways of Negotiations: Reframing Inhibitors Into Collaboration

BACKGROUND

As a young and fresh MBA degree holder, you joined Modern Tool Manufacturers as Assistant Junior Manager in the Marketing division right after graduation. After 2 years, you got a promotion during a moment of crisis when the head of the unit left suddenly. You bravely took on the new role as unit head. No raise was given despite promotion and demands from you. Your boss claimed you were still quite young and inexperienced for the job. After 5 years at the company, the situation remains stagnant. So far all your yearly raises have been nominal and while you are now getting HK$30,000 monthly, your colleagues at the same level are getting HK$35,000.

You have had enough and it is time to confront your boss and try to negotiate for the “big money”. You will be tough this time because you know your boss is a great negotiator. However you are determined to get what you deserve.

Negotiation Process

• The employee booked a time with his boss to sort out salary and other contract issues. The employee gave his boss two weeks lead-time. This was to ensure that both collaborating parties would have sufficient time to think about their “game plan”.
• The meeting started straight off with the employee asking for a substantial salary raise from HK$30,000 to HK$35,000.
• This request was indirectly rejected by the boss saying that: “Due to the financial turmoil that the market is still in, it is difficult to hand out any raises at this point and time. However, I hope we could find other solutions that would be mutually pleasing.”
• The employee was not dismayed or baffled by this answer. He had already thought of ways of tackling the boss’s rejections.
• The employee started off by explaining his own point of view with emphasis on his past achievements.
• The boss did give the employee credit for successfully managing a recent marketing project that was a huge success. And he stated that although he did not have the authority to change the bonus-paid policy, he can try to give some fringe benefits instead.
• The employee got a bit distracted by the previous comment the boss made. Was it another one of his maneuvers to get the employee’s mind of the salary raise? Furthermore the employee started to ask irrelevant questions and remarks in order to have more time to consider his maneuvers.
• The boss seemed to understand the employee's distraction and suggested re-starting the negotiation openly by stating a list of benefits that the employee wanted.
• The employee restated his strong desire to have higher salary by elaborating his preferences for higher quality of life and being respected by his peers. 
• He recognized that he focuses too much on the "big money" without considering other possible deals. Therefore, he started thinking of making the single-issue request into multi-issue requests.
• The employee and the boss went into the details of unbundling issues and discussed about different package deals.
• Even though the boss was reluctant to give the employee the salary raise he requested for, he was still interested in finding a good solution for the both parties, a win-win.

Our group decided to focus on a few tactics that did not work and tactics that did work in our negotiation process. We chose to reveal the outcome of the negotiation process at the beginning in order for the reader to better understand our explanations.

Contracted Items at the End of the Negotiation

1.    Housing subsidy, which will also reduce income tax

2.    Comprehensive medical insurance

3.    Increased paid holidays

4.    New job title

TACTICS THAT DO NOT WORK

With focus on employee inhibitors

Our group was fortunate enough to achieve a win-win outcome in our salary negotiation. Achieving a win-win outcome did not come easily and there were several tactics that did not work at the beginning of our negotiation process.

Illusion of Transparency

The first inhibitor from the employee’s perspective was the Illusion of Transparency. According to a research (Gilovich, Savitsky, & Medvec, 1998), people are prone to overestimate their ability to reveal their private information and mental state. As a result, negotiators easily misunderstand each other's interests and meanings, and even perceive them as lies. Because of concealing private information and inactive listening at the beginning of the negotiation process, the whole process might be jeopardized. At the very beginning of our negotiation process, the employee was asking for what he wanted, that is, a raise to his monthly salary from HK$30,000 to HK$35,000. He had already in advance thought about what and how to react to his boss’ rejections and present his point of views in different scenarios that might occur during the negotiation.

The employee had already decided to:

• Focus on what he had achieved last year
• Emphasize what he had contributed to the company so far
• Prepare a document on what people with similar backgrounds are gaining in the market at the moment
• Re-iterate of outcome / promise during his previous appraisal negotiations
• Try to guess which possible rejections might be raised in the process
• Think of ways to tackle the boss’ rejections 

But the following barriers may block an effective negotiation:

Mind game bias

During the negotiation process, bias can be found because of the different perspectives that the employee and employer might have. For example, arguments what the employee had achieved so far might be exaggerated, focusing on the “words” rather than the “meaning of the sentences” for the promises that were discussed during last appraisals, and so on. In addition, the employee was well aware of the fact that his boss was good at manipulating him into thinking what he wanted.

Lies

Tenbrunsel (1998) found that there are incentives to increase one's willingness to distort the information to another party in a social exchange. Additionally, in traditional economic models, people make rational self-interested decisions to deceive based on the incentives they faced during the decision making process (Jensen & Meckling, 1976). Thus, in order to overcome the “negative objections” – some might actually be suggestions –  the employee may think of some “false facts” that he thought the boss could not verify. For example, he said: “My performance has been perceived as very good by most of the internal counterparties.” However, he might not know that his boss had already received some suggestions from the same counterparties about enhancing the employee’s performance. These might make the employee doubt the credibility of the employer that can create a scar in the employer-employee trust, which can eventually hinder the negotiation process.

Asking irrelevant questions

Because of the employee’s bias towards the whole situation from the beginning, in order to not “lose” the fight, the employee might ask irrelevant questions to emphasize his past efforts to try to change the boss' mind. For example, “Do you know how long I have been working every day to contribute to achieve my performance levels?” However, for the employer, the things that justify a salary raise such as previously contributed performances are less important than the employee’s potential to grow and to keep on contributing more to the company. His boss did not want nor have the interest to know how long the employee had been working on a daily basis.

Inactive listening at the beginning

Like previously mentioned, because of using the wrong tactics from the beginning of the negotiation, the employee focused only on what he wanted to achieve and did not want to be an active listener to the employer. If he kept overlooking the preferences and interests of his boss during the negotiation without putting himself in the boss' shoe, the negotiation would most probably go towards a state of fighting against each other instead of solving the issue together. Thus, the negotiation process could not be smooth.

Focus on Dividing-the-Pie

Another inhibitor was the Focus on Dividing-the-Pie. The disadvantage of dividing-the-pie approach is the impression of getting the interests without being concerned about the interests of others. It can be interpreted as “Total Sacrificed Value” > “Total Earned Value”. So, raising someone’s salary might decrease the company’s total resources for doing other things (such as training sessions).

Our negotiation was a classic example of dividing-the-pie: the employee tried to demand for a salary raise, and the employer immediately rejected. The employer often values money as a whole pie, by accepting the salary jump means the “Total Sacrificed Value” > “Total Earned Value” from the employer’s perspective. The employer should realize that negotiation is not purely a competitive situation. The gain of the employee does not represent equal sacrifices by the company.

Our negotiation process seemed to have gotten off to a bad start. Both the employee and employer were talking about their concerns and insisted that their views were the right ones (e.g. both employee and employer kept on providing “facts” to back up their own proposals). Both even talked about irrelevant topics. They were not adopting a cooperative orientation! Also, because starting off wrong from the beginning, the whole beginning part of the negotiation became a single-issue discussion (i.e. about salary raise).

React in a Passive Way

One more inhibitor was the React in a Passive Way. Without good communication and starting the negotiation off well, it is unlikely to achieve a win-win situation. The negotiation had become an ineffective process because both parties were not open to change. The employee began by explaining his own point of view, focusing on the past and blaming others. These are the major “passive ways” which inhibited the negotiation process to focus on relevant issues to ensure a win-win for both parties.

TACTICS THAT WORK

With focus on eliminating employee inhibitors

After re-examining the whole early part of our unsuccessful negotiation process, we finally found out that both the employee and the employer had to be open to change in order to re-start the negotiation successfully. The following tactics were used that lead us to a win-win outcome.

Perspective Understanding

A recent research (Trötschel, Hüffmeier, Loschelder, Schwartz, & Gollwitzer, 2011) suggests that perspective taking can be a powerful tool for negotiation. Perspective understanding contributes positively to the quality of the negotiation, which allows both the employee and the employer to consider the counterparty (or from a different perspective). Using such a skill would allow the employee to identify what to do in order to achieve/overcome/solve the core issues during the negotiation process. For example, what the employee “actually” wants is to increase his total earnings, and he understood that his boss couldn’t directly raise his monthly salary. Therefore he asked his boss to increase the number of paid holidays and to give him a housing allowance, which saves on paid income tax besides the monthly salary. These benefits can be perceived as additional “earnings”.

Perspective understanding can also prevent both the employee and the employer to get lost in the illusion of transparency and the potential of leaning towards “dividing the pie”, because issues will be seen as a whole to be solved by both parties. “Transforming a fixed-pie negotiation into an integrative, multi-issues one will increase the chances for a win-win” (Thompson, Win-Win Negotiation: Expanding the Pie, 2009).

Making Clear What the Other Parties Capabilities Are

Either over-estimating or under-estimating one’s ability might lead to an inefficient negotiation process. Before doing our re-negotiation, the employee, tried to find out what his boss can give/need to further discuss with him or even if the company cannot give (e.g. as his boss is not the person to “change” the bonus-paid policy, but he should have enough authority to give fringe benefits). The employee assorted a list of benefits he wanted and what he will ask the employer during the negotiation. By doing so, the employer will more likely agree to what the employee requested, but also, the employee would know exactly what the employer can do to help after the appraisal meeting.

To reach a win-win, it was crucial for the employee to create more moving part to the negotiation! In the end, our group realized we needed to make package deals, not single-issue offers. The employee was able to explain to his employer that, e.g. a comprehensive medical insurance is not a big monetary investment for the company, but it has a great psychological meaning to him - the company cares about his well-being. 

ANALYSIS & EXPLANATION ON HOW TO WIN-WIN

It was not a coincident that the negotiation reached a win-win. The negotiation process included the above tactics that did not work at the early stage, but both parties recognized they have to collaborate to break the deadlock. Therefore, our group switched the focus on solving the task instead of focusing on small and insignificant things. 

Frames of Multiple Offers Unlock False Conflict

At the beginning of the negotiation, both parties had different interests about the salary issue. The employer rejected the employee’s request indirectly by avoiding making pre-mature concessions, and the employee focused on explaining why he deserved an increase in his salary. The discussion became a sequential bargaining and the atmosphere was filled with a strong smell of gunpowder. Their negative emotions cause them to trend to believe their interests being incompatible, therefore, false conflict (Thompson, Win-Win Negotiation: Expanding the Pie, 2009).

After recognizing they had focused on the single-issue of salary too much, the employer disassociated from that way of thinking to suggest to the employee to express what he truly desired and preferred. They started making multiple offers of equivalent value simultaneously by discussing about ways to reduce tax and to obtaining other allowances. With re-thinking the single salary issue into multiple-issue offers, they jumped out from the well of false conflict and saw wider choices from different perspectives with higher feasibilities. This notion not only broadened their minds, but also changed their relationship from opponents to comrades - from inhibitors to collaborators.

Making Package Deals Collapses Fixed-Pie Perception

In the middle of the negotiation, they switched their focal point to discuss their uncovered priorities and preferences. The employee, who has high incentive to increase his salary, observed the limitations of the boss. Then, he tried to think of the multiple-issue offer by requesting the employer to give him fringe benefits. With the notion of a fixed-pie perception (Thompson, Win-Win Negotiation: Expanding the Pie, 2009), the boss may need to pay extra efforts to seek further approval from higher-level management with explanations and support. While the company also considers fringe benefits as additional costs to some extent. In other words, it can be seen that the gain of the employee represents sacrifices by the boss or even by the company.

At the later stage of the conversation, their relationship changed to comrades finding solutions, and they tried to unbundle the issue and think of a wide range of solutions from the point of view of expanding the pie such as reducing tax paid to the government, fringe benefits that benefit both parties, and so on. Finally, they successfully came up with a win-win solution by using package deals by creating values from third parties and making use of their differentiation.

CAPITALIZING ON IDENTIFYING VARIOUS DIFFERENCES

To reach our win-win outcome, the items of the agreement in the package deal capitalized on differences in valuation, expectations, risk attitude, time preferences and capabilities. Here are the detailed explanations on how they worked. 

Differences in Valuation

For the employee as an individual, we believe that money (salary) does not play a decisive role. Something intangible such as a sense of achievement and security are factors that matter. According to Maslow's hierarchy of needs (Maslow, 1973), the employee as a Unit Head may need something of higher level such as health and higher quality of life. Thus, the medical insurance and additional paid holidays are offered in order to help the employee to build a stronger sense of security.

Another item of agreement is the promotion. For the employer, offering a better job title is quite a vivid change. A better job title really means a lot for the employee in terms of job satisfaction. Although job tasks and privileges remain the same, a better job title can help him gain more respect from both insiders and outsiders. It also benefits him with a higher bargaining power if he wants to switch to another company in the future. While a promotion not only encourages the employee and other employees, it most importantly is almost free for the company.

Differences in Expectations

Employee and the employer expectation are without a doubt different. One stands for himself and the other for the company. From the perspective of the employer, he wants an employee more loyal to the company in order to maintain a stable working environment. And the boss expects that the agreement can lead the employee to have higher productivity and morale.

As we all know the better one’s performance is in a company, the better the welfare and remuneration should be. The employee expects the company to give him some benefits in order to keep him because of his previous performance. Based on these findings we believe the win-win outcome can fulfill the expectation of the employee while the company can expect the employee to continue on bringing more values after getting the benefits.

Differences in Risk Attitude

The employee is working as Unit Head earning HK$30,000 per month in Hong Kong. Based on this we can assume that he is more likely to be risk-averse. Taking this into consideration, what the employee needs is, perhaps, a stable working environment, which means long-term benefits rather than the short-term salary. As for the boss, it is risky to raise his salary since he may take the higher salary and then quit to go to find another job with higher bargaining power.

Since the employee's salary is lower than the market standard, it is easy to find a higher salary job with low risk. Meanwhile, the boss has the risk of being unable to hire a similar high talent person to work for the company. Therefore, at the end, the employer offered some fringe benefits that can fulfill the needs of the employee, but not a direct salary raise.

Differences in Time Preferences

Despite of young age, the employee has been working for the company for 5 years and has already asked for a salary raise before but failed. He was impatient to get more benefits because he has had the time to wait to achieve greater profits over a longer period. As a result, the employee is able to bring higher values to the boss and the company because of higher productivity and morale at the same time.

Differences in Capabilities

For the capabilities, the job level and conditions of the employee and the employer are quite different. The employee bravely took over the role of Unit Head and has done quite a good job for the past 3 year. However it seems that he lacks negotiation skills because he has tried to negotiate for a salary raise before but failed many times. The employer is definitely a good negotiator since he has successfully postponed the negotiation process previously. On another note, the employer has the power to promote employees while the company has enough to pay fringe benefits. Then again, the employee is intelligent and talented enough to take up the role of Unit Head. Finally, the agreement can be beneficial to the employee and the employer since the company can also retain high quality human capital by linking up employee performance and benefits.

WHY IS THE OUTCOME A WIN-WIN?

The employee has been working as Unit Head for 3 years and is still not getting paid as much other unit heads. The employer has postponed the salary negotiation for so many times already and by this time, the employer decided to offer the employee what he deserves based on the principal of trust. But, the employer doesn’t want to directly offer a salary raise the employee is asking for, instead, he wants a win-win outcome for both.

When the employee asked for an increase of HK$5,000 to his salary, the employer said NO. From the perspective of the employee, the first offer he requested was never his BATNA. Because no one should show their BATNA at the very beginning, they should always leave some room for bargaining. As for the employer, it is never wise to accept the first offer, either. Hence they decided to break down the salary into more moving parts and finally make it a package deal instead of a single-issue offer to have more flexibility and bargaining power. “The more moving parts, the better the potential deal” (Thompson, Win-Win Negotiation: Expanding the Pie, 2009).

1. Transferring 1/3 of the salary to become a housing allowance

By transferring part of the salary into a housing allowance, the employee can save on his income tax and the total revenue will increase. This is what we call “expanding the pie” because the company actually pays nothing but the employee will benefit from it. We took the third party, the government, into the negotiation process and generate benefits from the government. According to the salaries tax calculation on the Hong Kong Inland Revenue Department’s website (Hong Kong SAR Government, 2011), the employee will end up saving about HK$1,300 on a monthly basis

2. Comprehensive medical insurance for the employee (HK$1,000)

The employer offers an extra HK$1,000 for a comprehensive medical insurance for the employee. In monetary terms, the employee can without a doubt make use of the full medical insurance value, but the employer just needs to pay HK$800 more or less because of the bulk purchase discount. It is a good deal for the employer, and also, the employee will gain a higher sense of security and is more willing to stay in the company because other companies would not offer such a comprehensive medical insurance. As a result, not only the employee will be more loyal to the company, but also the healthier employee will be able to provide a better working environment in terms of hygiene and morale that will benefit the company.

3. Extending paid holidays from 15 days to 25 days

The employee gets an extra 10 days of paid annual leave for holiday, which offers him better holiday flexibility to enable a better quality of life. For the employer, the efficiency of the employee should increase because of the relaxing holidays. Given the assumption of 45 working hours per week, the total of 25 days leave will decrease his working hours to 40 working hours per week (45 hours – [25 days / 52 weeks * 45 hours / 5 days] = 40.673 hours/week). According to the Rules of Productivity (Cook, 2008), the total productivity of the employee, especially as a knowledge worker, will actually increase.

The Rules of Productivity (Cook, 2008) 

4. Better job title

The title of the employee will be raised from Assistant Junior Manager to “Senior Manager” maintaining Unit Head status. The employee will gain the respect of other colleagues, which should bring him a higher sense of accomplishment. At the same time, he might have higher bargaining power when involved with clients or even finding a job in the future. For the employer, it's practically free to offer a better job title for the employee and it shows him and all the other employees their possible career path and the opportunities for future promotion. This can again boost the group morale within the company.

CONCLUSION

After the negotiation, the contracted items our group agreed upon are shown in the following table:

	Employer (ER)		Employee (EE)
	costs (HK$ / month)	Intangible / Non-monetary  benefits	earns (HK$ / month)	Intangible / Non-monetary  benefits
Housing subsidy ($10,000 per month)	501		1,267.52
Comprehensive medical insurance	800	- ↑ Quality of Working Environment - ↑ Group Productivity	1,000	- ↑ Sense of Security - Healthier
Increased AL (+10 days)	0	- ↑ Efficiency - ↑ Loyalty	821.923	- ↑ Quality of Life
New job title (Senior Manager)	0	- ↑ Group Morale - ↑ Productivity	0	- ↑ Sense of        Accomplishment - ↑ Respects form insiders - ↑ Powers for outsiders
Total	850		3089.42

Detailed instructions and calculations:

1. Stamp duty for 2 years for rent contract (monthly rent 10k) is 0.5% p.a. of rent amount
2. Assumptions:
1. Split monthly salary from 30k to 20k basic salary and 10k rental reimbursement
2. No other allowances that EE can report, except personal tax allowance
3. No agent's fee since a valid rent contract in force. EE introduces flat owner to ER for negotiation
4. The result is calculated by using Tax Computation (HK Government, 2011)
3. Based on the original monthly salary, the extra 10 days AL costs HK$30,000 x 10 days / 365 days= HK$821.92

At the very start, the employee requested a HK$5,000 monthly salary raise. At the end of the negotiation, he got only about HK$3,100 in monetary terms, but he got other intangible benefits as well and in total earned far more than the HK$5,000 he requested. Furthermore, although the employer ended up paying HK$850 per month more, the company earned many intangible benefits in both short and long term. This investment should pay off to the company as knowledge by keeping the good human capital.

Our group came up with integrative agreements, which lead to a win-win outcome for both parties. According to the Pyramid Model (Thompson, Win-Win Negotiation: Expanding the Pie, 2009), integrative agreements can be distinguished on three levels, the higher the level, the more beneficial to both parties, but more difficult to achieve. The repackaged agreement can be categorized as level 3 integrative agreements since it improves both parties position without making anyone worse off. Therefore everyone enjoys improved outcomes.

To conclude, we decided as a group to do a deep quantitative and qualitative analysis on the whole negotiation process taking into consideration different tactics and both parties' point of views. In the process we all learned a lot more about what makes or breaks a win-win deal. We also hope our thorough analysis is able to help our peers. 

OUTCOME AND LESSONS LEARNT

• We learnt that a negotiation doesn’t necessarily need to be a competitive scenario. It is not required that there is a winner and a loser. Realizing this will probably influence our next negotiation tactic.
• We do not need to confront our subordinates during appraisal meetings when negotiating. Changing existing negotiation tactics will enable a win-win situation without much additional cost to the employer. 
• As an outcome we can say that in a negotiation, the negotiator should try to change one’s perspective to consider the differences between different roles. We believe a win-win outcome would then be more easily reached. 

BIBLIOGRAPHY

Cook, D. (2008, September 28). Rules of Productivity Presentation. Retrieved from Lost Garden: http://www.lostgarden.com/2008/09/rules-of-productivity-presentation.html

Gilovich, T., Savitsky, K., & Medvec, V. H. (1998). The Illusion of Transparency: Biased Assessments of Others' Ability to Read One's Emotional States. Journal of Experimental Social Psychology, 75(2), 332-346. doi:10.1037/0022-3514.75.2.332

Hong Kong SAR Government. (2011, August 1). How the Provision of a Place of Residence to an Employee is Taxed. Retrieved February 2012, from GovHK Information about eTAX: http://www.gov.hk/en/residents/taxes/salaries/salariestax/chargeable/residence.htm

Jensen, M. C., & Meckling, W. H. (1976, October). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. doi:10.1.1.194.8080

Malhotra, D., & Bazerman, M. H. (2008, March 14). Psychological influence in negotiation: An introduction long overdue. Journal of Management, 34(3), 509-531. doi:10.1177/0149206308316060

Maslow, A. H. (1973). A Theory of Human Motivation. Psychological Review, 50, 370-396. Retrieved from http://psychclassics.yorku.ca/Maslow/motivation.htm

North Central Regional Educational Laboratory. (2000, October 9). Building Collaborative Partnerships. (U. D. Education, Editor) Retrieved from Putting the Pieces Together: Comprehensive School-Linked Strategies for Children and Families: http://www.ncrel.org/sdrs/areas/issues/envrnmnt/css/ppt/chap1.htm

Sebenius, J. K. (2002). The hidden challenge of cross-border negotiations. Harvard Business Review (2002), 76-85. Retrieved from http://www.lapetus.uchile.cl/lapetus/archivos/1223389876C2-Cross-borderNegotiations.pdf

Tenbrunsel, A. E. (1998, June). Misrepresentation and expectations of misrepresentation in an ethical dilemma: The role of incentives and temptation. The Academy of Management Journal, 41(3), 330-339. doi:10.2307/256911

Thompson, L. L. (2009). Establishing Trust and Building a Relationship. In L. L. Thompson, The mind and heart of the negotiator (3 ed., pp. 128-158). Upper Saddle River, New Jersey, USA: Pearson/Prentice Hall. Retrieved from http://lib.cityu.edu.hk/record=b1858063

Thompson, L. L. (2009). Win-Win Negotiation: Expanding the Pie. In L. L. Thompson, The mind and heart of the negotiator (3 ed., pp. 74-95). Upper Saddle River, New Jersey, USA: Pearson/Prentice Hall. Retrieved from http://lib.cityu.edu.hk/record=b1858063

Trötschel, R., Hüffmeier, J., Loschelder, D. D., Schwartz, K., & Gollwitzer, P. M. (2011, October). Perspective taking as a means to overcome motivational barriers in negotiations: When putting oneself into the opponent's shoes helps to walk toward agreements. Journal of Personality and Social Psychology, 101(4), 771-790. doi:10.1037/a0023801

Wertheim, E. (1996, November 21). Negotiations and Resolving Conflicts: An Overview. Retrieved from Negotiations and Resolving Conflicts: http://iiasa.ac.at/Research/DAS/interneg/training/conflict_overview.html

Extension

Comment made on Feb 25, 2012 05:56 PM

I am glad that Beehive brought up Maslow’s Hierarchy of Needs Theory, and the importance of fulfilling higher level of needs. Housing allowance (since it is shelter) achieves the ‘physiological’ of needs, which is at the bottom of the hierarchy. Medical insurance offers a secure environment and absence of illness; fulfills an upper level of needs, which is ‘safety’. Paid annual leave can increase the ‘belongingness’ of the employee. Finally, a better job title accomplishes the need of ‘esteem’. By fulfilling the ego needs, the employee gains respect from others and social recognition. However, in the above win-win outcome, it did not accomplish the need of ‘self-actualization’, which is the highest level of Maslow’s Hierarchy of Needs. Since ‘self-actualization’ is a growth need, which it constantly develop even after it is achieved, the person will desire more of this need, instead of less (McShane & Travaglione, 2007). In order to achieve ‘self-actualization’, the organization needs to know what the employee wants in long term. Through improving reward effectiveness and re-designing job, the employee can gain self-fulfillment. 

Job design is “the process of assigning tasks to a job, including the interdependency of those tasks with other jobs” (McShane & Travaglione, 2007, p.179). The goal of the corporation in job design is to construct employment that can be performed productively; nevertheless workers are motivated. According to job characteristics model, job characteristics, such as skill variety, task identity, task significance, autonomy and feedback, can influence the outcome of work motivation, growth satisfaction, and work effectiveness. Rotation, enlargement and enrichment can increase work motivation. Job rotation refers to shifting from one job to another. It allows employees to learn from different roles of company and become multi-skill. Job enlargement is to assign additional tasks within existing job, which permit employees to increase skill variety and combine skills to finish the tasks on hand. Job enrichment is giving the employees more responsibility, through delegation and empowerment. 

McShane, S. & Travaglione T. (2007). Organizational Behavior on the Pacific Rim (2nd ed.). McGraw-Hill.

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Based on the above comment we received on our blog entry about negotiations, we would like to re-evaluate our negotiation process. The comment gave us food for thought what our final package result would look like if we would integrate Maslow’s Hierarchy of Needs Theory to it. To clarify Maslow's theory, let us illustrate it as a pyramid (as it most commonly is depicted).



Maslow Hierarchy of Needs



The primary needs Maslow identified fall into five groups:

1. Physiological: breathing, food, water, sex and sleep
2. Safety: of body, employment, resources, morality, family, health and property
3. Social: love, belongingness, friendship and family
4. Esteem: self-esteem, confidence, achievement, respect of and by others
5. Self-actualization: morality, creativity, spontaneity, problem solving and acceptance of facts

As the commentator points out that with the housing allowance, our employee is able to achieve the lowest level needs, i.e. the ‘physiological’ needs. What was also mentioned was that the medical insurance offered by the employer will offer a secure environment and absence of illness. This would then again fulfill the needs for safety. When again the paid annual leave can increase the employee's sense of belonging within the work community. Last, but not least a better job title accomplishes the need of "esteem".

It does seem that our negotiated package deal was able to cover all the lower level needs of the employee. Additionally according to Maslow people are motivated to take care of their lower level needs before the higher-order needs. 

However due to the comment, we did come to realize a shortcoming in our package deal. Where is the highest need of all? Self-actualization? The commentator suggests to have a look at job design. We thought this was an excellent way to create a sense of higher achievement for the employee.

Job re-design

The goal of job design is simplifying, enriching, enlarging, or otherwise changing jobs to make the efforts of each employee fit together better with jobs performed by other workers. Our idea here is that with the job re-design the employer could enjoy improved performances by the employee. How could this be achieved? In our blog post context, the job re-design for the employee could mean assigning him to work with another team on projects that require a lot of creativity and thinking-out-of-the-box, where he/she would be able use his/her problem solving skills even better. At the same time, we believe the employer should then decrease the employees day-to-day administrative burdens, such as documentation and irrelevant team meetings.

Therefore based on the comment and our re-evaluations, we would like to suggest the following contracted items at the end of the negotiation:

1. Housing subsidy, which will also reduce income tax
2. Comprehensive medical insurance
3. Increased paid holidays
4. New job title
5. Job re-design

References
http://blogs.forrester.com/nigel_fenwick/10-03-12-secret_successful_social_communities_4_social_needs
http://ivythesis.typepad.com/term_paper_topics/2009/09/job-redesign-improving-performance.html

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Comment made on Feb 25, 2012 08:50 PM

I agreed perspective taking is a powerful tactic for negotiation. However, I found that many bosses just pretended to step into other’s shoe, but not really wanted to identify the actual needs of employee. When I resigned last year, my boss negotiated with me over two hours and I told him what my wants and concerns. He pretended to take my perspective and ask many questions about my new company and job natures. He tried to analyze and make comparison between my current and new job for me. However, after negotiation, I found that he still didn’t understand my needs and solve my problems. He challenged my decision of resignation and all his comment on my new job was bad and subjective. I felt a strong antipathy towards him and realized that he took advantage of my trust as I shared information with him and believed that he will provide advice from my points of view.

Obviously, he showed the bad example of perspective taking and turned this useful tactic as inhibitor. Thus, I think the important point to use this tactic is “how to take other’s perspective”.

Here are some tips:

1) Put own perspective away temporarily – before taking other’s perspective, don’t think yours. It will make your mind clear in order to ask and listen from others objectively.

2) Ask and listen - in a negotiating situation, ask simple and open-end questions to find out what the other person's concerns and use listening responses to make sure you heard correctly.

3) Don't argue - arguing is about trying to prove the other person wrong. However, it is useless to prove the other one wrong in negotiation process. You only can state your disagreement or comment in gentle and respective way.

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Thank you for sharing your real-life experience with us. Since we’re taking the role as the employee focusing on the inhibitors, the final win-win outcome inevitably benefits the employer a little bit rather than the employee. In our win-win negotiation process, the employer does has taken into consideration the employee’s perspective and offered what the employee wants. Salary is not the only element that the employee cares about, according to the Maslow’s Hierarchy of Needs Theory, just as our first blog extention mentioned, there’re still higher level of needs that need to be fullfilled. What we offered is not only the money, but also other things such as a sense of security, achievement and etc. In our win-win negotiation process, we’ve done the most for both the employee and the company, we have even generated benefits from a third party.

And also, thanks the respondent for raising quite good tips for the perspective-taking strategy.

For us, using the perspective-taking strategy means that we need to connect our minds, such as our emotional experience and the way we think, with the counterparty. Perspective-taking is not trying to understand others in one’s own perspective, it means change your own perspective to others’ perspectives. However, in the business area, we’re not making friends by using the perspective-taking strategy, we use it to manage employees and generate benefits.

Actually, perspective-taking strategy has two usages:

1. One is that taking the perspective of the counterparty to understand what the counterparty really wants and satisfy the wants and needs in order to keep the relationship. 
2. Another objective of taking counterparty’s perspective is to find out the BATNA of the counterparty in order to offer the not-that-good but reasonable and acceptable offer to save the benefits for oneself. In the real society, we think most of the employers would use the perspective-taking strategy in order to achieve the second objective because they have their own mission as in a higher level of the position, standing for the company and saving profit for the company rather than considering the benefits for the employee.

The position of the employer can not be defined as wrong in this real case, but we have to say that his perspective-taking skill is really weak so his intention is too easy to be exploited. It’s obvious that the boss wants to retain the respondent but he used the wrong expressions.

The most important thing in the perspective-taking strategy is to be a real actor, if one wants to convince others, he/she should convince him/herself so as to gain the counterparty’s consensus.

References

www.zreading.cn/archives/2396.html

http://baike.baidu.com/view/20312.html

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Comment made on Feb 24, 2012 11:59 PM

I agree with Winky that increase the pie is important and it is somehow the best way to arrive a Win-win outcome in the environment with limited resource. Also, I would like to add my opinion on how to enhance the quality of the outcome by looking at the interest of both parties.

Frankly, if I am the employee, I may not agree with the offers provided in the given example. As mentioned in above we need to take a close look to the expectation and valuation of both side in order to arrive a integrative outcome. The proposal offered by Beehive is good, but as an employee, I would rather the employer offer the paid raise and I would allocate the resource myself. It seems to me that this is just the best offer provide by the employer, instead of a best offer preferred by the employee.

Thus, I would suggest that the Employer and the employee should list out all their expectations and focus what they interested the most and turn it into a “interest-based” negotiation. For example, I try to listed some expectation of the employee and the employer, and I can link up the “performance Bonus” on the employee side and the “increase performance and efficiency” and making more profit” on the Employer sides. The better the performance of the employee, the better the company's performance and his bonus.

Employee's focus:

- paid raise

- career opportunity

- performance bonus

Employer's focus:

- reserve talent staff

- increase performance and efficiency

- Making more profit

- capturing opportunities

Besides, I think giving a new job title to the employee doesn't help to enhance the employee's satisfaction in long term term. Also, the employee may still ask for paid raise shortly; Or he may use the new job title to look for a new job. On the other hand, promoting the young and in-experienced staff may decrease the loyalty of other unit head. This is actually what happened in my company last year. Thus, the employee should think about the constituency and potential impact of the offers.

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Thank You for your suggestion, as our initial idea was to break our team into two groups, one acting as the employee and one as employer to give some of constrains and background information for the discussion. We understand some of the situation might not be go exactly as it would in reality, but it brings an idea about different people might have different needs at different level according to the Maslow’s hierarchy needs (see our reply earlier). You are right; the employee might want to have their salary rise instead of other benefits offered by the company. To look at this compensation in a neutral perspective. Using money as an incentive is perhaps the most expansive incentive (Yu and Li, 2000) the company can offer. Our ultimate goal is achieve to a win-win situation instead of one side taking advantage of the other. Therefore we have come up with various solutions that will both benefit the employee and employer.  

Employee's focus:
- paid raise
- career opportunity
- performance bonus

Employer's focus:
- reserve talent staff
- increase performance and efficiency
- Making more profit
- capturing opportunities

According to the points listed above, these values are based on self-interests. If one of the side's look solely at their own self-interests, the only way to solve the problem would remain and often a deal would not be easily made. It is because self-interests often lack the willingness of “expanding the pie” and the pie means the focus with different perspective and methods. Self-interests might be the problem that prevent someone from achieving a win-win situation.

Indeed in our blog we listed that our employee did not get an salary rise, but he broke it down into different things such as vacation days and medical insurance which are equivalent to the salary rise or of even more value than that. This is the benefit of “thinking outside the box” and preventing self-interest; sacrifice something you were stubborn to get and in return get something greater than you expected.

References

P. L. Yu and J. M. Li (2000) Lecture Notes in Economics and Mathematical Systems, Volume 487, Part 1, 45-5