Angel and Devil Get Win-win

Angel and Devil Get Win-win (Why this topic? In employment relation, employer will see himself/herself as Angel, who offers a job with good salary to employees, but employees are devils since they are nonstop to ask for more to share the company profit. Vice versa, employees will see themselves as Angels, who are hard working and fully contribute to the company, but employers are devils as they always take advantage of employees and cut labour cost.)

I.    The Story Background

Honey Bee Company is a multinational soft-drink company with over 1,500 employees. Headquarter is in Hong Kong with 10 global branches, five in Asia, four in Europe and one in USA. As globalization and cultural diversity in Hong Kong office, the employees came from different countries and with different expatriates such as American, French, Japanese, Australian and Chinese work together.

The human resources policy and pay scale of this company are similar as Hong Kong Government. Promotion and increment in salary are not only depended on the performance, but also related to the year of service. The regular operation is handled by each branch, but each branch has different budget. All the promotion, salary increment and any benefit changes need to get HK headquarters’ approval.

Angela is an American who joined Honey Bee Company Headquarter since her graduation from a leading school of management with MBA qualifications. She worked for 2 years as Assistant Junior Manager and being promoted as Unit Heads for 3 years. Her job is mainly focus on the sales operations in Hong Kong.

As Angela found that her salary is $5,000 lower than other unit heads and she has no bonus after the policy change, she would like to have a negotiation with me, her boss, for a “big jump” in her salary.

II.   The Way to Achieve Heavenly Outcome (Win-Win Outcome)

In order to produce a satisfactory arrangement for both of us, we invested half day in our negotiation process. I found a conference room with sofa and café corner to ensure that we can negotiate in a comfortable environment with no interruption.

1.    Inhibitive Tactics (The Road Blocks to Heavenly Outcome)

                Before the meeting, I used around 30 minutes to think
                about the discussion  approach. As an employer, I tried
                to aviod adapting below tactics that inhibit us
                from arriving at a win-win outcome: 

1.1.   False Conflict

In Angela’s view, it is unfair as other unit heads’ monthly salary are $5,000 higher than her and there is bonus at year-end for others but not her due to the policy change. Therefore, insistence on the fairness to all staff with total income paid according to the experience and age instead of paying the same amount to all staff in same level will lead to false conflict and cause we cannot achieve the win-win outcome.

1.2.   Fixed-Pie Perception

The fixed-pie perception is the belief that the other party’s interests are directly and completely opposed to one’s own interests (Leigh L. Thompson, 2009).

Angela would like to have salary increment to the same level as other unit heads. I can provide her the options, allowance and other fringe benefits. However, this is not a win-win outcome as this is just a short-term solution to increase the money she gets. With outstanding academic background, I am confident that Angela can be further developed and have good progression in coming years. She should not just focus on the short-term salary increase but the long-term career development that we provide to her to expand the pie.

1.3.   Compromise

Compromise is to slicing the pie which does not really ensure that a win-win negotiation has been achieved.

Angela and I can compromise on the increase in payment by providing the few options to her. To influence Angela, I tried to altering the target’s incentives and/or altering the target’s information set (Malhotra & Bazerman, 2008). Although the payment can be increased, the focus on my side is to retain the talent staff in my company for the expansion of the company. If I increased the payment to Angela, this is not a win-win situation as I am not sure if she will stay in our company after the increment.

1.4.   Delays

The delay in negotiation can be a tactic to inhibit the win-win outcome.

If I delay the conversion with Angela on the salary increment, Angela will not satisfy with not receiving response shortly. With little discussion to understand the interests of each other, the win-win outcome cannot be reached due to the different focus on our expectations. Therefore, an early discussion is encouraged to understand Angela’s expectation and advise her on our expectations. Also, we can establish trust in the meeting with her to come up with the win-win solution.

1.5.   Illusion of Transparent

Illusion of transparent is the situation that the interests of the two parties are not transparent to the other.

In our view, the salary range of staff and personal career development plan for each staff should be kept confidential as these are the company’s financial and human resources plan. As Angela does not know the plan of the company, there is illusion to her that what we are doing is not meeting her expectation. Also, the change in policy on no bonus given to supervision position in this year is not transparent to her until other staffs get the bonus. This also becomes a road block to inhibit the win-win situation.

2.   Useful Tactics (Flying to Heavenly Outcome)

               In the process, different tactics were used to help us to 
               achieve the objectives:

2.1.   Information Gathering and Trust Building

Make your negotiated decision based on principles and results, not emotions or pressure (Wertheim, E. 2007). I did some research before the negotiation and would like to use them to support my views objectively. Some documents were prepared and shared with Angela to explain the existing and prediction of the economic conditions. Also, Angela gathered the recent salary report and data analysis of Hong Kong job market. We used the method of information sharing as the way to build trust. Knowledge-based trust is grounded in behavioral predictability, and it occurs when a person has enough information about others to understand them and accurately predict their behavior (Leigh L. Thompsn, 2009). We believed that a trust relationship will help us to achieve the win-win situation.

2.2.   Perspective-taking

We used the perspective-taking as one of tactics. By taking the perspective of the other party, negotiators attempt to see the world through the counterparty’s eyes (Leigh L. Thompsn, 2009). I put myself into her position and tried to understand what she needs. As a young and well trained staff, she is looking for a further career development and higher reward of her hard effort. She would like to get a fair deal from the company. Also, she understood that cost control is one of the main company’s objectives and her loyalty is appreciated by me. 

2.3.   Inquiry about others’ interests and priorities

I asked her questions regarding her interests and priorities, what achievement she would like to get in the coming few years (short-term plan) and invited her to share about her ten years career plan (long-term goals) with me. Such inquires helped me to further understand her and showed my caring. 

2.4.   Offering information and priorities

Meanwhile, she also asked me my expectation on her and the company’s 3-year plan. I explained to Angela that the company announces a global expansion project which is one of the main projects in the next few years and most unit heads are interested to join or involve in this project. I disclosed more detailed information and let her know it is a great opportunity for staff career development.

2.5.   Unbundling of issues, avoidance of single-issue offers and multiple
equivalent simultaneous package deals

I tried to un-bundle the issue by using adept at expanding the set of negotiable issue. Apart from focusing on salary increment, I considered to provide more benefits such as better medical allowance and stock options, or other package e.g. new contract with an end-of-contract gratuity. I offered three different packages with difference arrangements for her to choose. Angela also let me knew her options:

Option	Honey Bee Company	Angela
1	Increase salary with annual normal rate and change the medical allowance from HK$1,500 to HK$5,000 per month on reimbursement base	Request over 16% salary increment and promotion
2	Allow employee to buy 1,000 shares of company stock options with 30% discount. The options can be exercised after 1-year service.	Join the expansion project, second to worldwide offices for further exposure with HK2,000 living cash allowance per month
3	Change the permanent contract to 2-year contract with an end-of-contract gratuity equivalent to 15% of the total basic salary.	Ask for 80,000 sales incentive bonus per year if the target is met

Negotiating each issue separately does not allow negotiators to make  trade-offs between issues. (Leigh L. Thompsn, 2009) and Negotiators who make multiple equivalent offers enjoy more profitable negotiated outcomes and evaluated more favorably by the other party. (Leigh L. Thompsn, 2009) 

Unders these options, we felt easier to make trade-offs and comparison. We were conformable for the trade-off made, more satisfied and enjoyed with the negotiation outcome.  Making multiple offers simultaneously will increase the chance of sucessful negotiation.  At the same time, we had to contol our budget.  Therefore, we had to re-bundle those options into several equal value packages and each package should have different value to Angela.  We achieved our "win" situation by controlling the budget.   On the other hand, Angela achieved her "win" situation by choosing the package which best fit and highest value for her.

Finally, we re-bundled to these plans: (a) increase salary with annual normal rate + join the expansion project + gratuity bonus; (b) HK$5,000 medical allowance + stock options + year-end incentive bonus; (c) join the expansion project + HK$2,000 living allowance + HK$5,000 medical allowance.  

2.6.   Differences identification

During the meeting, we also tried to exploit our difference of preferences to capitalize on integrative agreements:

2.6.1.     Differences in Valuation

The further global expansion is the main objective of the company and Angela is interested in career development and much more exposure.

2.6.2.     Differences in Expectations

For the company, it expected to control the labor cost effectively. And Angela would like to get better salary increment or a big money.

2.6.3.     Differences in Risk Attitudes

The company can afford to be risk-seeking since Angela is replaceable, even though it is not easily to find the same caliber staff shortly. Angela is risk-averse as it is difficult for her to find a similar job in multinational company in recent poor economic condition.   

2.6.4.     Differences in Time Preferences

As an employee, Angela is more impatient than her boss. She would like to get the negotiation result as soon as possible in order to plan her careers and personal life in coming few years.

2.6.5.     Differences in Capabilities

The company has vision to expand and made investment all over the world. Angela is an energetic staff and has potential to become a leader in higher level.   

III.       Heavenly Outcome (Win-win outcome)

Luckily, the tactics that benefited the negotiation were well used and I avoided all ineffective tactics. After a few round discussion, I tried to focus on our differences and preferences, reviewed all options to re-bundle three new offers that made the win-win negotiation possible. Finally, Angela opted the plan (a) that keep her salary increment in annual normal rate, but take the payment method of gratuity instead of salary increment and she is invited to become one of the key members of the global expansion project.

As Angela accepted to join this project and 3-year structured and rotational plan is offered. She will station in 10 oversea branches to handle different tasks. After completing the plan, she will be paid a lump-sum gratuity with amount HK$180,000 (HK$5,000 x 36 months) and assigned as a Chief Manager to oversee the worldwide operations if her performance is outstanding. In Hong Kong, this position level is same as unit head, but higher than the managers in worldwide offices.

From the Angela’s perspective, this plan provides not only a great amount of gratuity, but also worldwide exposure and opportunity of high level management for her career development. Her career path will become much more smooth after the plan.

On the other hand, I can retain the talent staff for company global expansion and no need to recruit the other person to handle this new project. Also, there is no big jump of her salary to avoid disturbing the existing remuneration packages for the HK staff in the same position given their experience and age.

This is a win-win outcome to match with our differences and filful our needs.

IV.     Conclusion

            Negotiation is an interactive communication and bargaining process. A lot of skills and tactics must be used to facilitate arriving at a common goal.  Win win outcome can be achieved even both parties have different or opposite desires and points of view.  Therefore, Angel and Devil are able to find the way to achieve heavenly outcome if they find the right path just like Angela and I did.

References

Malhotra, D. & Bazerman, M. H. 2007. Investigative Negotiation. Harvard Business Review, September 2007

SEBENIUS, J. 2002. The Hidden Challenge of Cross-Border Negotiations. Harvard Business Review, March 2002

Thompson, L. (2009).  Win-Win Negotiation: Expanding the Pie. The Mind and Heart of the Negotiator, Pearson Prentice Hall.

Thompson, L. (2009).  Establishing Trust and Building a Relationship. The Mind and Heart of the Negotiator, Pearson Prentice Hall.

Wertheim, E. (2007). Negotiations: An Overview (pp. 33). Ft. Leavenworth, KS: The US Amy Command and General Staff College.

Picture sources

1.      http://www.123rf.com/photo_3247647_angel-and-devil--kindness-and-evil.html

2.      Vincci’s friend