Christopher (2007) defined the negotiation as a problem-solving or bargaining process in which two or more parties discuss their differences of interests, and eventually aim to reach a joint agreement upon their common concerns. In the case of Thomas Broadcasting Group (TBG), two parties, employers and employees, are disputing to change the pension scheme over proposals in the light of a huge pension fund deficit. It suggests closing the final salary scheme and adopting the money purchase scheme to new entrants to the TBG.
The reason is that the existing employees contribute more in their monthly contribution than previously and the company currently have been under considerable pressure from other competitors. Particularly, web-based provider can offer many if not all of the same kind of provision as TBS. While, the union of journalists feel that the proposals are unfair and threatening strike action if the proposals are not withdraw. The structure of this report can be based on the objectives listed above.
First of all, it introduces the decision-analysis approach to negotiation and finds out three key sets of information for TBG.
Secondly, the claiming value and creating value will be described and apply on TBG. Thirdly, 6 barriers are going to be listed and improvement can be adopted by the company. After that, the report would discover a suitable solution for the negotiation. Finally, a conclusion of the report will be provided. Raiffa’s (1982, 2001) approach is prescriptive from the point of view of the party receiving advice but descriptive from the point of view of the competing party, because he assumed that all the negotiators are erring folks and need suggestion.
Analysing the approach requires assessing the following three key sets of information.
A. Each party’s alternative to a negotiation Before a negotiation, negotiators must decide the Best Alternative To a Negotiated (BATNA) (Fisher, Ury, & Patton, 1981). If the offer valued less than BATNA, we accept. Otherwise, we reject. The process logically gives the reservation point. That is the point at which the negotiator is indifference between a negotiated agreement and an impasse. Why the BATNA is important to negotiator? Without thinking the BATNA, human beings are easy for emotions to hold sway. It leads to accept the offer which is less value than BATNA. However, it is better to reject the offer than adopt it.
The BATNA is not unique. For example, to buy a house, if the full price exceeds the budget, the BATNA can be renting an accommodation or taking a mortgage. If you don’t consider the BATNA and insist to buy the expensive property, this may lead to a bankruptcy. Firstly, TBG needs to set a reservation point. It can be decided by the money purchased scheme. Then, BATNA is any offer valued not less than the money purchase scheme. For example, the pension found deficit can be decreased by reducing the pension payment of final salary scheme or increasing the previous employees’ contribution.
B. Each party’s set of interest Most negotiators usually care more about the demand of a party than interests. However, the most important thing in a negotiation is interests, as it is the motive behind the position. According to the motivation, some creative solutions can be made. This is very helpful to get more of what they want A case of a chief purchasing officer from a fortune 100 organisation to negotiate a contract of purchasing new health-care product ingredient with a European company can explain the importance of interests.
Both sides agreed most terms except the exclusivity. The reason for buyer is that they cannot afford to invest a new product based on the ingredient, if competitors had access to the same ingredient. The European company did not accept the condition of exclusively sales, as he had an agreement with his cousin who bought 250 pounds a year for local selling. Once interest of both parties discovered, the terms changed. The CFO agreed to provide exclusivity, with the exception of hundred pounds annually for the producer’s cousin.
In the case of TBG, interests of changing the scheme could be cutting off the pension fund deficit, gaining more money to invest, and transfer some risk to employees, as in most final-salary schemes, staff pay in 5% of salary while employers pay the equivalent of 10% of salary. In most money purchase schemes employees and employers pay in about 5%. The interests of union of journalists are not increasing the contribution or not losing money after retired or not putting the pension in a risk. Because the money purchases scheme depend on the investment performance of the pension fund. C. The relative importance of each party’s interests
It is necessary to aware the relative important each party’s interest. The best agreement reached by trading off relative unimportant issue for more important one. For example, candidate may be more interested in the success in the career rather than the higher salary. So he may choose the job with promotion opportunity rather than the occupation with higher salary. TBG is facing the challenge in recent years. So, the relative important interest is gaining more money to invest. However, if the union of journalists consider the safety of the pension fund, the most important interest is not putting the pension in a risk.
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