Post on 24-Feb-2023
2 | P a g e
EXECUTIVE SUMMARY
This report is in two parts; the first part gives a generic definition for negotiation as
a back and forth communication between parties to reach an agreement whiles
leaving each party positive. It also gives the types of negotiation; distributive and
integrative and goes on to give some examples or scenarios where negotiation is
used; managerial, legal and commercial.
The second part covers salary negotiation and defines it as the process of
determining and agreeing on the type of compensation package that an employer
will pay an employee in exchange for some form of labour. It talks about scenarios
where salary negotiation is needed and also gives the strategies for salary
negotiation for a new employee and also how to apply for a salary raise if one has
already been working in a particular organization.
3 | P a g e
TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION ........................................................................... 4
NEGOTIATION ..................................................................................................... 4
TYPES OF NEGOTIATION……………… .......................................................... 5
EXAMPLES OF NEGOTIATION………….………………..…………………7
CHAPTER 2: SALARY NEGOTIATION ........................................................... 9
WHEN IS SALARY NEGOTIATION NECESSARY……….. ........................... 9
SALARY NEGOTIATION STRATEGIES………………………………...…10
HOW TO NEGOTIATE SALARY RAISE…………………………………...13
CONCLUSION…….....……………………………………………………….15
REFERENCES………………………………………………………………...16
4 | P a g e
CHAPTER 1
INTRODUCTION
NEGOTIATION
Negotiation is the back and forth communication between people or a group of
people designed to reach an agreement while leaving the other side intact and
positive.
It is a process of interaction between two or more parties who consider that they
need to be jointly involved in an outcome, but who initially have different
objectives, seek by the use of argument and persuasion to resolve their differences
in order to achieve a mutually acceptable solution. Another important
consideration is that negotiation implies acceptance by both parties that agreement
between them is required before a decision can be implemented.
Negotiation can also be defined as the process of communicating back and forth,
for the purpose of reaching a joint agreement about differing needs or ideas. It is a
collection of behaviours that involve communication, sales, marketing,
psychology, sociology, a customer or a seller, a boss or an employee, a business
partner, a diplomat or a civil servant, legal system, government, and international
5 | P a g e
affair. On a more personal level, negotiation takes place between friends, couples,
parent or children.
TYPES OF NEGOTIATION
There are two main types of negotiation: distributive negotiation and integrative
negotiation.
Distributive Negotiation: Distributive negotiation is a way of dividing up a
single, fixed quantity where a gain to one side results in a loss to the other.
While both sides may benefit from the deal, one side will definitely benefit
more than the other. Distributive negotiation is also referred to as the “zero
sum” or the “fixed pie” negotiation. Distributive negotiation is often used in
situations where there is a single, fixed issue to be negotiated, and where the
greatest concern is getting the best possible value. In real worlds of
negotiation, two parties face off with the goal of getting as much as possible.
You may have thought of situations such as buying an expensive item such
as a car or a house. In this instance, the seller wants to go after the best price
they can obtain, while the buyer wants to pay the lowest price to achieve the
best bargain. A distributive negotiation usually involves two people who
6 | P a g e
have never had a previous interactive relationship, nor are they likely to do
so again in the near future. Also, when we are dealing with someone
unknown to us, and it’s a one-time only occurrence, we really have no
particular interest in forming a relationship with them, except for the
purpose of the deal itself. We are generally less concerned with how they
perceive us, or how they might regard our reputation. Ours and their
interests are usually self-serving.
Integrative Negotiation: Integrative negotiation involves a more
collaborative approach, where both sides work together in the hopes of
achieving the greatest possible benefit for both sides. Usually involves
higher degree of trust and forming a form of relationship. Both parties will
want to walk away feeling they have achieved something which has value by
what each wants. In purely integrative negotiation, both sides cooperate to
achieve the greatest benefit. This type of negotiation requires that you be
good at both creating value and claiming it. Your goal is to create as many
options with much value as possible for both sides. And then you need to
claim the best value for yourself among the options you have helped create.
This can result in both sides getting exactly what they want, but in most
cases it requires that each side compromise slightly to get what it values the
most.
7 | P a g e
EXAMPLES OF NEGOTIATION
The art of negotiation is required in diverse fields of life. Some scenarios where
negotiation is used are:
I. Legal negotiation: These negotiations are usually formal and legally binding.
They are also contractual in nature and relate to gaining legal grounds. It
usually involves situations where an attorney, acting on behalf of his client
either as an advocate or an advisor, seeks to obtain a favourable outcome.
This is usually used in dispute resolution. The objective of legal negotiation
is to obtain an advantageous settlement of the matter in dispute prior to trial.
A classic example is when two parties contract to undertake a contract and
one of the parties fail to perform their part of the deal or honour the contract.
In such a case, since there has been a breach of contract, the two parties can
sit and with their attorneys negotiate how to compensate the offended party
without having to settle the matter in court.
II. Managerial negotiations: these types of negotiation are done within the
organization and are related to internal problems in the company or
organization. It is in regard to the working relationship between the groups
of employees. Usually, the manager needs to interact with members at
different levels in the organization structure. For conducting the day-to-day
8 | P a g e
business, internally, the superior needs to allot job responsibilities, maintain
a flow of information, direct the record keeping and many more activities for
smooth functioning. All these require entering into negotiations with the
parties internal to the company.
III. Commercial negotiation: this is conducted with external parties. The driving
force behind such negotiations are usually financial gains. They are based on
a give and take relationship. Commercial negotiations successfully end up
into contracts. It relates to foregoing of one resource to get the other. A
typical example is when a person is awarded a job and has to negotiate his or
her pay (salary negotiation) or a common example like buying a house from
a realtor where the buyer could negotiate for the payment terms.
9 | P a g e
CHAPTER 2
SALARY NEGOTIATION
Salary negotiation is the process of determining and agreeing on the amount and/or
type of compensation that an employer will pay an employee in exchange for some
form of labour.
Salary negotiation is not simply a series of talks designed to increase your pay.
Rather, it is an avenue for the employer and the prospective employee or “on the
job” employee to agree upon a complete compensation package that meets both
party’s needs. It is an important part of the interview process, and should always be
conducted in good faith.
For most people, discussing salary is a nerve wracking experience. However when
managed correctly, it can contribute to a positive and more fulfilling professional
relationship between you and your future employer.
WHEN IS SALARY NEGOTIATION NECESSARY
After successfully passing a job interview
An “on the job” worker applying for salary increase
10 | P a g e
SALARY NEGOTIATION STRATEGIES
The way that you approach salary negotiation has a tremendous impact on its
outcome. The following five principles serve as a guide:
Know what you are worth and what the current market can bear. Successful
starts with a great deal of background research , as you will need to
determine the types and amounts of compensation that a person with your
level of experience, education, skills and other qualifications can command
in your industry.
Salary is best discussed when the employer has made an offer. This is to
avoid over-selling or under-selling one’s skills and capabilities. Example a
company could be able to offer a process engineer $2000.00 for his services
but if when asked in an interview how much that engineer will want to take
as a pay, and he makes the first offer of $1000.00, it could ruin his chances
of getting the $2000.00 which the company can offer. This may lead to
being under-paid. What’s, if the interview process reveals that you have
more to offer than originally expected, you could end up being considered
for a different job with a higher salary range. Because salary negotiation
shifts the employer’s focus from your attributes to your requirements, a
11 | P a g e
premature salary discussion may prevent the employer from ever learning
that you warrant considerations for a higher paying opportunity
Salary should be viewed in context of other employment issues. A process
engineer must know that there are other employees to be paid and also there
are other things such as fuel, transportation, health insurance, employee
accommodation, water and other utility costs that the company bears.
Most offers are negotiable and target organization. Base your salary
requirements on information gathered from several sources. Speak to
professionals in your field; review the salary ranges for similar positions in
similar organizations; know the agency’s size/budget; and visit different
salary calculator websites to help ensure that your information is accurate.
It is okay to ask for what you want. Do not assume that an employer’s first
offer is the best offer. Many employers will initiate a salary discussion by
proposing a salary figure that is at a lower end of the position’s allocated pay
scale. This is to allow room for negotiation.
Consider how much experience you have: One must bear in mind that an
engineer who has recently graduated and searching for a job cannot earn
same pay as another who has been working in the field for several years.
Those with experience typically earn more money. Remember to talk about
the amount of experience you have if it will help you negotiate a better
12 | P a g e
remuneration. If you do not have a lot or any experience at all, be realistic
about what you ask for.
Do not talk about how much money you need: When going through salary
negotiations, don’t tell your boss that you need to make money because your
bills are high, your house is expensive, you need to get married etc. This
information is irrelevant to him or her. The only time you can use these
excuses is if your job is being relocated to a region in which the cost of
living is higher and your employer is offering a salary that takes that into
account. Even with that, it should be done in view of the fact that it all goes
down to increase the company’s profits, since if your standard of living is
high, your productivity for the company will be high.
Be flexible: When negotiating your salary, you may not get as much money
as you want. There is a good chance that you will have to compromise. The
trick is to find out how much you are willing to bend and what you will do if
your boss does not offer you a salary that you find acceptable. Will you start
looking for another job or will you turn down the job offer? If it seems like
you cannot get the salary you want perhaps your potential employer can
sweeten the deal like offer you additional time off or some other fringe
benefits.
13 | P a g e
HOW TO NEGOTIATE SALARY RAISE
In the situation where you may already be working and you know you deserve a
better salary, you are long overdue for a raise, your boss has not been forthcoming
with one or sitting around and waiting for a raise has not worked, this is how to go
about getting the raise.
Find out how much others working in your field are worth: The first thing to
do before asking for a raise is to learn about typical salaries in your field.
You can get this information by conducting salary surveys or if you belong
to a professional association, check with it to see if it has salary information
available. One must also figure out how much how much they can earn and
it can be done by using the number of years of working in that field.
Evaluate the financial health of your employer: if your employer is having
financial problems: if your employer is facing financial problems, it will not
be appropriate to ask for a raise. As an employee, you are probably aware of
your company’s financial health and this can ultimately be done by looking
at the financial reports of the company.
Prepare your argument: You really should not approach your boss for a raise
as an argument. Think of it as selling yourself just as you will do if you were
trying to get a prospective employer to hire you. Make a list of all the things
14 | P a g e
you have accomplished for the company and also make a list of your
relevant skills such as the ability to use some specialized softwares for
working etc.
Decide on what to do if your proposal gets turned down: before you walk
into your boss’ office to ask for the raise, think about what you will do if he
says no or agrees to pay you less than what you asked for. Will you quit your
job? Or will you wait and ask for a raise at a later date/ your answer may
depend on what your boss says. Example, was the offer turned down
because of your performance? If so, ask yourself if criticism are valid. If
they are, think about which changes you can make. If they are not, you may
want to go somewhere else where your efforts may be appreciated.
Set up an appointment to talk to your boss: Show your boss how serious you
are about asking for a raise. Treat this as a business meeting. Do not discuss
your raise with him by email, at the water cooler or by telephone. You
should set up an appointment with his or her secretary or personal assistant
to meet him.
Present your case: Your boss may agree to give you a raise immediately.
Your case should be convincing enough to him and it should contain
information gathered about typical salaries in your field and your
accomplishments.
15 | P a g e
CONCLUSION
In a nutshell, salary negotiation is an important aspect of one’s job and when done
properly can result in a fulfilling and positive relationship between an employee
and his employer or a “to-be employee” and his prospective employer. As such
more serious approach must be given to the exercise and all employees must learn
it right as the need may arise for it at any given time in a working relationship.
Remember that what you negotiate for at your first job affects the salary
compensation of all your future jobs.
16 | P a g e
REFERENCES
Salary negotiation. Retrieved October 9, 2014 from
http://careerplanning.about.com/od/negotiatingoffers/a/raise.html
Negotiation. Retrieved October 9, 2014 from
http://www.skillsyouneed.com/ips/negotiation.html
Salary negotiation. Wagner F R. Graduate school of public service
Negotiation. Retrieved October 9, 2014 from
http://www.laynetworks.com/Negotiation-Skills.html