Training Manual for the international e-negotiation tournament

Introduction to e-negotiation

Sponsors:

The InterNeg Group and Concordia University (Inspire), Montreal, Canada
ICAN Systems Inc. (SmartSettle), Vancouver, Canada
McMaster University (WebNS), Hamilton, Canada
MeetingOne Corp., Denver, Colorado
Social Sciences and Humanities Research Council of Canada
Trinity Western University, Langley, Canada
UMass Center for Information Technology and Dispute Resolution, U.S.A.
University of Muenster and RWTH Aachen (Negoisst)

Contents

Introduction to Negotiations
Labour Management Negotiations
  -Stages of Negotiation
  -Styles of Negotiation
Electronic Negotiation Systems (ENS)
e-negotiation Tournament
Appendix A: Electronic Negotiation Systems
  - ENS without Analytical Support
  - ENS with Analytical Support

Introduction to Negotiations

People everywhere have unfulfilled desires and spend much of their time trying to satisfy these desires. A common way of fulfilling desires is by using money to purchase goods or services. If the asking price of some good or service seems high, the buyer might start a discussion about the price or some other aspect of the considered transaction. If the seller responds, then a negotiation has started.

Negotiation usually involves parties attempting to give up something in exchange for something else. The parties involved in the negotiation feel that they have won when the perceived benefit of the negotiated outcome is greater than what they thought they had when they started.

Labour Management Negotiations

From an organizational perspective, negotiations that occur between employees and management involve those parties attempting to change the parameters of their relationship. When individual employees have found it difficult to resolve issues on their own, they have often resorted to collective representation, in the form of a union. When an organization becomes unionized, the management no longer negotiates with individual employees over such issues as rates of pay, type of work, or hours of work; they now negotiate with the labour union that is representing the interests of the employees.

Stages of Negotiation

There are five general stages in the conventional negotiation process between labour and management. They include the following:

1. Negotiation preparation
2. Bargaining range creation
3. Bargaining range narrowing
4. Action
5. Ratification

During negotiation preparation, each negotiating party consults with its constituents to determine the constituents goals and priorities. Information is collected and developed into a list of issues. Desired outcomes are identified and prioritised; traditionally a point where the party would not be willing to go below, often referred to as a bottom line , is also identified. The Negotiation Preparation stage may also include meetings between the negotiating parties to establish a negotiating protocol and procedures.

Once negotiation begins, the parties present their respective positions and rationale, and exchange initial proposals. These presentations result in bargaining range creation for each issue by identifying what the parties hope to achieve in each area. The bargaining range for each issue represents the difference between one party's initial proposed decision on that issue and the other party's initial proposed decision. The establishment of a bargaining range could also be looked upon as creating a framework for agreement. (It should be noted that the presence of a bottom line for either side may limit the potential benefits that could occur from mutually beneficial tradeoffs within a package of issues.)

During the bargaining range narrowing stage, negotiators move away from their initial positions toward the opponent's position, in an attempt to reach agreement. This is accomplished through the exchange of proposals or counter proposals. This part of the process is often the longest stage and typically degenerates into a tedious negotiation dance due to the time each side spends in private meetings refining its position and developing concessions, combined with the inevitable discussion at the bargaining table as each side defends its position.

Eventually, the action stage is reached. If this stage is reached at the end of a long process of conventional negotiations, parties may reach a point where each of them must decide whether to agree to the other party's last proposal or increase pressure on them through the use of an economic sanction. Unions may encourage their members to strike or the management may lockout their employees and close part or all of their business for a period of time.

Once mutually acceptable contract terms have been finalized, language is drafted to reflect the provisions of the new collective agreement and negotiators take the agreement in principle back to their constituents for ratification, the final stage of labour-management negotiations. Union leaders will ask their members to vote and Management will consult with its stakeholders to confirm that the agreement is acceptable to them. If one side rejects the agreement, the negotiators return to the bargaining table and work on stage three again. Once ratification is complete, legal representatives from Union and Management sign the collective agreement and it becomes a legal document.

Styles of Negotiation

The five stages of Labour Management Negotiation described above seem simple enough but the length of time spent in negotiating and the result of the negotiation usually depends on the country's labour legislation, the nature of the relationship between the two parties and the negotiating philosophies of each party. Historically, relationships between unions and organizations have not been very positive, and thus their negotiations have been somewhat adversarial. What has often happened in these cases is each side trying to maximize its own benefit while minimizing the other party's benefit, using the classic win-lose style.

In stages two, three and four of the conventional negotiation process, union and management negotiators using a traditional win-lose style use real or perceived power to maximize their opponent's concessions. They may achieve short-term gain but often at the expense of damage to the long-term business relationship. Win-lose negotiation is adversarial, involving deception and other tactics that attempt to increase one side's relative power. Negotiators focus on positions, not mutual problems, and are unwilling to make concessions or share information. Win-lose negotiation does not build trust and hinders relationship building. It usually results in strikes and lock-outs.

Negotiation style is considered win-win if parties attempt to achieve a better outcome by taking differences and commonalities into account. In these situations, negotiators become collaborators focusing on mutual problems rather than adversaries on each side of an issue; this style of bargaining is sometimes called integrative or principled bargaining. A win-win approach to collective bargaining focuses on the parties underlying interests rather than on the positions they may take at the bargaining table. ¹

This style becomes particularly important when parties are dependent on each other over the long term, as in the case of collective bargaining between labour and management. Despite their sometimes-divergent agendas, these parties have a long-standing business relationship to nurture and there is incentive to bargain with the other side's interests in mind. Negotiators using this style strive to achieve an optimal solution that takes the long-term interests of both parties into account.

In their book, Getting to Yes , authors Roger Fisher, William Ury and Bruce Patton propose that effective win-win negotiators demonstrate the following attributes:

• Don't bargain over positions, focus on solving the problem.
• Attack the problem not each other.
• Focus on long-term satisfaction and common interests. Winning a particular point in a negotiation may mean losing a chance to achieve a mutually satisfactory result.
• Consider available alternatives that benefit both sides.
• Base results on objective standards whenever possible. These may include:
• Historical experience;
• Industry practice; or
• Projections developed using quantitative analysis.
• Focus on positive tactics to resolve differences. Do not rely on deceptive behavior or bargaining ploys.
• Emphasize the importance of a win-win result.
• Develop a best alternative to a negotiated agreement. ²

There is still another way of negotiating that goes beyond win-win . This style of negotiating involves a process of finding ways whereby both parties will have their interests optimised. The pie that is being negotiated often becomes larger in these cases as a result of clear understanding of each other's issues, coupled with honest communication and trust. In these situations the negotiating parties become competitive problem-solvers ³ and utilize a combination of their assertive and problem-solving skills in the negotiation.

Electronic Negotiation Systems (ENS)

E-negotiation is defined as negotiations where traditional communication methods (i.e. verbal or written) are supplemented or replaced with online technology. An e-negotiation system enhances and supports traditional negotiation by providing powerful and convenient electronic tools. With the use of an ENS negotiators can easily achieve the beyond win-win results without having to ensure that both negotiating sides know how to be competitive problem-solvers. These systems can provide the following advantages to negotiators:

• Accessibility to one another via the Internet anywhere, anytime
• A choice of synchronous or asynchronous communication and interaction
• Document management
• A systematic process for the negotiation
• Automatic documentation of the proceedings
• Authentication, security, and privacy
• Analytical and decision support

Some of the potential benefits of using an eNS in collective bargaining negotiations are:

• Decreased time spent negotiating
• Better understanding of one another's position
• Better solutions for all parties
• Decreased use of negative power sources

There are two types of e-negotiation systems: those without analytical support and those with analytical support. Those systems without analytical support concentrate on providing organizational functionality so that negotiators can attack the problem rather than each other. The majority of existing ENS today is of this type. Examples of ENS without analytical support are MeetingOne, Negoisst, SimpleNS, and WebNS. (For a brief description of each of these, refer to Appendix A.)

E-negotiation systems with analytical support attempt to elicit, measure and represent the preferences of the negotiators, in addition to enhancing the discussion phase. They are specifically designed to encourage negotiators to exchange complete packages rather than negotiate issues one at a time. These systems employ algorithms that attempt to generate optimal solutions, on the basis of well-represented preferences, that are both fair and efficient. Two examples of eNS with analytical support are Inspire and SmartSettle. (For a brief description of each of these refer to Appendix A.)

E-negotiation Tournament

A research project sponsored by Social Sciences and Humanities Research Council (SSHRC) Canada has been established to better understand the benefits of information and computer technologies in negotiations, including labour-management negotiations. To gather sufficient data to study eNS in this context, an international tournament has been organized. The objective of the research project is to determine what benefits are realized when negotiators use an eNS in collective bargaining, and whether an eNS with or without analytical support provides a better solution.

The process will involve student teams from universities around the world negotiating the outcomes of a number of pre-defined issues using an ENS. The negotiation case used as context for the tournament will represent labour-management collective bargaining where parties are in the final stages of bargaining. The case will have 7 to 10 outstanding issues to be resolved, some quantitative and some qualitative. A complete description of the tournament is found at www.enegotiation.org.

Appendix A: Electronic Negotiation Systems

eNS without Analytical Support

1. MeetingOne (10 minutes minimum training) http://www.meetingone.com/
   Click&Share: This is a comprehensive multilingual web conferencing interface that is available 24/7. Easy to access and easy to use, the features will allow teams to negotiate more effectively by sharing applications, documents, websites, and to further communicate through the use of annotation, chat and feedback tools.
    
   
2. Negoisst (1 hour minimum training) http://www-i5.informatik.rwth-aachen.de/enegotiation/
   This is an electronic business-to-business negotiation system in which teams can use natural language to exchange semi-structured messages and jointly compose the terms of a complex contract.
    
   
3. SimpleNS (no training required) http://mis.concordia.ca/simplens
   This is a very simple system with which teams exchange text messages with two fixed threads of text. One thread is for discussion and the other is for offers. Negotiators have to check the system often as there is no email notification about their counterpart's activities.
    
   
4. WebNS (1 hour minimum training) http://pc-ecom-07.mcmaster.ca/webns/
   This is a process-driven real-time web-based multi-party negotiating system that offers dialogue windows for the exchange of natural language messages. Negotiation items need to be agreed before negotiation starts.

ENS with Analytical Support

1. Inspire (30 minutes minimum training) http://interneg.org/interneg/training/tournament.html
   This is a research system that is easy to use for simple negotiations in which the structure is already provided. Preferences may be represented with satisfaction graphs. Optimization is used to generate suggestions after an agreement is reached. Parties then resume negotiations about whether to accept one of the improvements.
    
   
2. SmartSettle (4 hours minimum training, client installation required) Getting started http://www.smartsettle.com/more/content.php?ttraining.html
   This is a system designed for complex negotiations. A joint session area is used to compose a Framework for Agreement with natural language messages. Preferences may be represented with satisfaction graphs. Optimization is used to generate suggestions before an agreement is reached. After a tentative agreement is reached, the system can be asked to look for an improvement that fairly distributes gains to both parties.
   

1 Chaykowski, Richard. (1995) The structure and process of collective bargaining. Union management relations in Canada (3 rd ed.).
2 Roger Fisher, William Ury, and Bruce Patton. (1991) Getting to Yes , Second Edition: Penguin Books.
3 Craver, Charles B. (2003) Negotiation Styles: The Impact on Bargaining Transactions. Dispute Resolution Journal.