BURGER v KUICK
Trumble Contractor (Trumble) was the general contractor for the construction of a shopping
mall. Burger Roofing Company (Burger) was the roofing sub-contractor. The manufacturer
and distributor of the roofing material in dispute was Make M. Kuick Pty Ltd (Kuick).
The “mall” area of the project was built as a promenade. The roof was a concrete deck to
which Burger applied MUC Waterproofing (MUC). Then a styrofoam protection board was
installed and, finally, a concrete wearing surface.
Before starting the job, Burger contacted Kuick, the manufacturer of MUC, for a
recommendation as to the type of flashing (flashing is the joining between the horizontal
floor and vertical walls) to use on the horizontal to vertical walls. Its recommendation was to
use a vinyl flashing adhered to the concrete deck and run up the wall for approximately 6 – 8
inches. Burger followed this recommendation. After the concrete was poured over the
styrofoam protection board, leaking occurred at the perimeter almost immediately.
Several measures were taken to correct this leak. Some were extensive. On 1st October one
year ago, Burger advised Kuick in writing that the additional costs for completing the
remainder of the perimeter that needed repair would be $73,600. Burger claimed
reimbursement of this amount and threatened litigation. Burger then proceeded to take the
corrective measures for the remainder of the perimeter.
On 8th October one year ago, Kuick wrote to Burger and stated that it was putting Trumble
and Burger on notice that it was not properly notified in writing before the commencement of
the initial repair work.
The matter of the claim by Burger is now in dispute. Both parties have consented to a
meeting as per the terms of their contractual arrangements.
Kuick’s Views
This job has been a nightmare for you. Burger asserts that the vinyl flashing that you
recommended for use was incompatible with your MUC waterproofing product. There is
probably some truth to the charge but you suspect that faulty workmanship also contributed
to the problem. You know that you will have to pay something for the last bit of work that was done – but you
want to minimize your losses. The contract clause states that you could not be responsible
for costs incurred for damages arising from defective products unless you were notified in
writing of the alleged defect and you subsequently gave written authorization to proceed in an
agreed-upon manner. In the previous “corrective efforts” that Burger and Trumble had
undertaken, everything was agreed verbally.
However, you thought that the $73,600 claim was greatly inflated. So you relied upon the
written contractual provision to deny any payment whatsoever:
a. You are sure that the prevailing rate in the area to have completed this job would
be approximately $42,000. Burger’s price is not simply inflated – it’s outrageous.
b. You know that Burger enjoys a good reputation for its work. But you will not
admit complete responsibility for this situation – there has to be some “face saving”
for everyone. You were advised by a local competitor of Burger that Burger’s rates
are generally 10% higher than the average.
c. The job has been frustrating for everyone. It is worth an additional $5,000 beyond
the prevailing rate just to “settle” this matter.
You will seek to explore the various expenses in the bill of $73,600. If you are persuaded that
the costs are legitimate, you will pay. However, you will pay no more than $54,000 to settle
this matter.
Burger’s Views (Roofing Subcontractor)
You are furious. The whole problem developed because Kuick’s MUC waterproofing
material and the vinyl flashing were incompatible. You and Trumble tried everything you
could think of to fix the roof, often after consulting with Kuick. That Kuick is withholding
payment for the amount claimed is the straw that broke the camel’s back.
You proceeded to fix the remainder of the roof without waiting for Kuick’s reply because you
felt it was the only way to protect yourself against extensive back charges claimed by the
owner for interior damage and loss of income from rentals.
You acknowledge that the figure of $73,600 is an “inflated figure”. You want to make Kuick
pay for the pain and suffering you experienced on this job. A closer estimate of the actual
price for completing the job would be $51,000. You know that even that figure is high for
the area. Kuick would probably find the prevailing rate to be approximately $11,000 less.
You are the best in the business, so it costs more to use you. Besides, this is not simply a new
job, but the remainder of an old job. There is a history to this – and Kuick is going to pay for
that history.
You believe that your reputation will be severely tarnished as a result of this job. Since Kuick
is responsible for this problem in the first place, it should pay you $10,000 as a token
payment for the loss of goodwill that you anticipate suffering.
You included $10,000 in your bill to Kuick to compensate for your pain and suffering. Of
course, in the actual bill, both this item and the goodwill item were hidden as “labour,
material, and overhead” costs. You want a nominal payment for this item.
Your bottom line for settlement is $53,600.
Questions:
Question 1
a) Identify the possible positions and interests of the parties and the key issues that need to
be resolved in this negotiation. (4 marks)
b) Identify any challenges or hurdles that may prevent the parties reaching a mutually
satisfying agreement. How would you advise each party to manage these hurdles and
challenges? (7 marks)
c) Will power and ethical issues have any impact on this negotiation? Explain. (4 marks)
d) If you were one of the parties, outline how you would propose to structure and
approach the negotiation. Include an analysis of how you would:
i. begin the negotiation;
ii. deal with possible objections to your approach;
iii. obtain an understanding of the other party’s views;
iv. develop options;
v. respond to “difficult behaviour” or “dirty tactics”;
vi. manage possible impasses;
vii. conclude the negotiation if successful; and
viii. conclude the negotiation if unsuccessful. (10 marks)
Part B: Choose one only of the following questions to complete.
Question 2
What role do you think gender plays in negotiation and can you give examples of this from
the course, readings and/or elsewhere in your experience? (25 marks)
Question 3
How would you describe the role of emotion in negotiation and can you give examples of this
from the course, readings and/or elsewhere in your experience? (25 marks)
Question 4
What importance do you attach to preparation in negotiation and can you give examples of
this from the course, readings and/or elsewhere in your experience? (25 marks)
Answers
Introduction
The purpose of this paper is to identify and explain various concepts and principles of negotiation both in theory and practice. The paper is divided into two parts. Part A has four questions which address the given case notes about Burger v Kuick. First, part A shows the interests and positions of the parties involved in the negotiation within the case. It also explains the challenges faced by both parties in the negotiation, and how the challenges can be addressed. Question 3 explains the concept of will power and ethical issues involved in negotiation. Lastly, part A explains the approach to negotiation by Kuick. Part B is an essay concerned with the role of emotion in negotiation. It shows how emotions affect negotiation and how emotions can be managed to enhance effective negotiation.
Part A
- Positions and Interests
Positions in a negotiation are concerned with a particular solution while interests are concerned with problems. A position also makes a demand while an interest shows the needs of a give party in negotiation. Positions ensure that the parties engage in confrontation before a problem is defined while interests create an environment for discussion. The position of a party is to demand. One party should do as the other party requires.
The negotiators in the case scenario appear to be in two different positions and interests. Kuick seems to have the position that the problem of leaking that occurred at the perimeter was partly contributed by faulty workmanship from the part of Burger. However, he does not dispute Burger’s position that it could also be caused by the incompatibility of the vinyl flashing that was recommended by Kuick and the MUC waterproofing product. This indicates that in terms of thinking preferences Kuick’s position is an abstract while that of Burger is concrete. Abstract person talks about ideas, theories, beliefs and theories while concrete person talks about realities, facts and figures (Guasco & Robinson, 2007). Kuick is an abstract person because he relies on the belief that the problem was caused by fault of the workmanship of Burger while Burger is a concrete person because he bases his position on reality by doing the artisan work by himself.
Kuick also thinks that the $73,600 charged by Burger is inflated and his interest is to minimize losses. Kuick agrees that Burger is well known for his reputation but is not ready to take full responsibility of the problem that occurred. Using the facts of prevailing rates in the area and written contractual provision, Kuick opts to deny payment on the problem but will be willing to pay if the costs are found to be legitimate. This reflects the positions and interests of employers in terms of hiring and firing. It shows that Kuick exercises the flexibility to hire or fire contractors, or to pay or not to pay them depending on the provision of the contract. Kuick’s goals and interests are to maximize profit, minimize costs and maximize productivity from the construction. These interests focus on the problem, and establish climate for common language and discussion.
This analysis shows that Burger maintains a clear position while Kuick attempts to achieve his interests because Burger says that Kuick should pay high amount while Kuick is interested in minimizing costs. Burger makes demands while Kuick sets an environment for discussion in order to meet his needs.
- Challenges and Hurdles
Emotions
One of the challenges facing the negotiators in this scenario is heightened emotional climate. In this case, one of the parties may become emotional and fail to consider the facts within the negotiation, or the interests and needs of the other party (Winham, 1987). It makes rational decision making difficult and causes members not to reach at good agreements. This problem can be resolved by developing emotional intelligence and setting out to understand each other and develop mutual trust from the beginning of the negotiation process (Zartman, 2009). Planning is essential to ensure that the interests, needs, information and facts of the situation are identified and taken into consideration ahead of individual interests and emotions.
Feedback
The second problem is lack of feedback. During negotiation, parties need feedback in order to evaluate their performance. The feedback should be accurate, immediate and specific. The challenge of confirmation bias can also be experienced as part of feedback problems. Confirmation bias involves selecting information to see what you want to see when evaluating oneself in a negotiation. Egocentrism is also another challenge that has been experienced in the case scenario whereby Burger blames Kuick for giving recommendations that are not recommendable. Egocentrism leads him to say that the problems experienced were due to the fault of Kuick, so he should pay for the suffering and pain caused. Kuick admits his mistake, but blames Burger for inflating the prices. This situation of egocentrism causes impediment for agreement not to be reached. The solution to this is for both parties to listen to each other’s views and opinions, and use them as feedback to evaluate their performance in the negotiation (Zartman, 2009). If the feedback indicates that one party seems to be drifting away in position, then the other party should improve his or her negotiation to win the attention of the other party and reach at an acceptable agreement. This challenge can be overcome through listening – in order to get feedback from the other party and act on it adequately.
Negotiator’s Dilemma
The negotiator’s dilemma occurs when both sides compete in order to achieve good outcomes. If one of the parties to a negotiation cooperates and the other one competes, the cooperative party will achieve less desirable outcome while the competing party will achieve better outcome. This makes negotiation difficult. Middling outcome is achieved when both parties compete.
Dilemma of Honesty
The dilemma of honesty refers to the amount of motives that one party is willing to reveal to the other party. This depends on values personality and relationship between parties. One party may use information against the other party, so each party should avoid providing too much information.
Dilemma of Trust
This refers to how much a party can trust the other party in a negotiation. The powerful party sets a positive or negative trust. The past trustworthiness of a party determines the future behaviour. When parties do not know whether to trust each other or not, they will face the challenge of negotiating effectively. To overcome this challenge, parties may put their agreement in writing and sign it.
- Will Power and Ethical Issues
Will power
Will power is the ability to achieve desired outcomes and cause ore prevent an action or make things happen (Menkel-Meadow and Wheeler, 2004). Tactics of power include rationality, ingratiation, coalition building, exchange, assertiveness, and imposing sanctions. Rationality involves the use of logic and reason to present data or facts. Ingratiation refers to the act of being friendly to the other negotiating party. Coalition building involves obtaining support from others while assertiveness is the process of using direct and forceful approach.
In the case of Kuick and Burger, there is power to dominate and control, and assertiveness. Burger uses his power of having good reputation to control the will of Kuick, while Kuick uses his power of being the employer to control the will of Burger. One of the sources of power is informational sources (Weigand and Dascal, 2001). Sources of power for Burger are informational sources while the source of power for Kuick is power of position. Both parties use their power for strategic purposes to achieve their desired outcomes – by balancing value creation with value claiming.
Ethics
Ethics also has an impact on this negotiation. Manipulation and coercion are some of the ethical issues that can be noted in negotiation (Menkel-Meadow and Wheeler, 2004). For example, Burger used manipulation using his informational power to hide the payment on his suffering and pain by disguising them as materials, labour and overhead costs. This is deceptive behaviour which involves falsifying and fabricating information (Young, 2008). It may affect negotiation because it enables Kuick to act on false information.
- Structure and Approach to the Negotiation – position of Kuick
| Phase | Activities/Strategies implementation |
| Begin the negotiation – preparation phase | · This involves preparation for the negotiation
· Gathering information · Best Alternative To a Negotiated Agreement (BATNA) o BATNA influences the power in negotiation o Find ways to improve his BATNA o Determine the BATNA of Burger – high compensation for his reputation and goodwill o Develop his partner before negotiating § Minimum cost ($51,000) and a good working relationship with Burger o Attempt to improve his BATNA |
| Deal with Possible Objections | · Separate people from the problem
o Objections from other people are dealt with by separating them from the problem. In this case, people may become emotionally attached to their positions. o Listen carefully to the positions of others and determine if they meet the desired outcome. o Determine whether the objections are ethical and just o Burger is emotionally attached because he focuses on his reputation more than anything else. o Unethical – through manipulation of costs |
| Understanding of the other party’s views | · Asking open-ended questions to understand the views of the other party, e.g.
o What is your price quote? o Why do you choose such high prices? o Why is the price top high compared to those of your competitors? o What do you wish to accomplish from your work? · This improves integrative performance and outcome · Helps to identify common ground · Paying attention to the other party’s non-verbal communication to identify their interests, e.g. tone, body language and semantics |
| Develop options | · Possible solutions to the problem
o Agreeing with the demands of Burger o Suggesting a lower common ground at the middle e.g. $60,000 o Stick to low-cost or minimum cost e.g. $51,000 · This creates additional value of working together |
| Respond to Difficult Behaviour | · Listening is important to understand the other party
· Explain the importance of trust and working together · Clear and effective communication · Reiterate the importance of commitment and motivation to work together · Competition makes all parties worse off |
| Manage Possible Impasses | · Identifying cognitive biases of both parties, how they affect negotiation and working hard to establish a common working ground.
· Look at one’s behaviours and perceptions, recognize differences and respect the other party · Reverse the role play and put oneself on the shoes of the other party · Improve one’s interpersonal skills such as locus of control and self-monitoring · Improve on communication skills including listening, working on available options, questioning, and understanding meanings of body language. |
| Conclude the negotiation if Successful | · Successful if the agreed cost is minimum – $51,000
· The parties should shake hands and agree to work together again · Kuick apologizes for the incompatibility of recommendations given and promise to do better next time · Pay the required amount promptly. · Thank Burger for accepting the request |
| Conclude the negotiation if unsuccessful | · Unsuccessful if the high cost of $73,600 is maintained
· Kuick to inform Burger that he is not satisfied but he will pay the amount to maintain his part of the agreement · Terminate working relationship and opt for other alternatives in future · Pay full amount as required |
From the table above, the negotiation process begins with preparation for the negotiation. It then moves to other phases including information gathering, formulation, strategic development, preparation, evaluating alternatives, listening to the other party, managing difficulties, and concluding the negotiation.
Part B
The Role of Emotions in Negotiation
Definition of Emotions
Emotions play a significant role in negotiation, especially when conflict arises within the negotiation. They are internal feelings that direct people towards the things that matter to them, and tell them what they need. It creates cognition and plays a significant role in creation of meaning (Salovey and Mayer, 1990). Emotions are developed during decoding when parties are finding out the intentions of the other party, and encoding which entails impression management. In this case, parties to a negotiation may become emotional if they find out negative intentions or when they get negative impression about the other party’s position or views.
The Affect Theory
The affect theory by Tomkins/Nathanson explains the key categories of emotions in terms of positive affects, neutral affects and negative affects (Salovey and Mayer, 1990). Positive affects include excitement and joy. Excitement creates interest while joy enhances excitement. In this case, negotiators create interest from the other party by enhancing exciting environment during negotiation. On the other hand, joy creates enjoyment. Therefore, a negotiator should reinforce the emotion of joy in a negotiation process in order to enhance enjoyment. For instance, when negotiating about the construction of a child’s playground the contractor may enhance joy among the children in order to enhance their enjoyment and make the negotiation successful because the ultimate goal will be to attract more children.
Neutral affects include surprise and shock (Riva, 2006). Startling leads to surprise. Surprise is essential in negotiation if it is accompanied by a positive outcome. For instance, if one of the parties is given a birthday present unexpectedly, it acts as a surprise and it may encourage him or her to cooperate in the negotiation in order to enhance an optimal position that benefits both parties equally. On the other hand, a negative surprise may cause failure in the negotiation. For instance, if the surprise involves taking the negotiator to a new place with scaring animals or bad smell, then he or may be discouraged from cooperating in the negotiation.
Negative affects include terror/fear, anguish, rage/anger, disgust, dissmell and shame/humiliation. Terror may cause fear among negotiator. For instance, the negotiator may terrify the other party by pointing a gun on him or her and threatening to shoot if the other party does not perform one or more act contained in the negotiation. This causes fear and may cause the other party to fulfill the agreement in fear, which may not be satisfactory to both parties and ruining the relationship between the parties.
Anguish or distress may affect negotiations by causing the inability of a negotiator to understand and synthesize information effectively in order to make rational decisions and choices during negotiation (Riva, 2006). For instance, when a buyer and seller are negotiating about the sale of a product, a distressed buyer may not be able to analyse the features of the product and judge the honesty of the seller effectively. This may cause impulse buying, and the buyer may later realize that he or she has been induced to buy something that she or he does not need. This ruins the relationship between the buyer and the seller, and the buyer may not go back to buy from the same seller again.
Anger also causes problems during negotiations. When someone becomes angry, he or she does not think rationally. It may cause negotiators to fight as a way of pouring out their anger on each other, leading to destruction of the relationship between the negotiators (Riva, 2006). Anger also causes a negotiator not to see good things about the views of the other party. This leads to poor outcomes or ineffective negotiation between the negotiating parties. For example, if two parties meet for negotiation and one party admits that she or he has forgotten an important document, or fails to show up completely, the other party may become angry. As a result, he or she may paralyse the negotiation with his or her anger. However, anger pays in other times. For instance, it may pay when parties are interdependent. It may also be necessary when expressions are used strategically and when anger is justified.
Emotions such as anger, happiness, sadness and surprise affect the ability of negotiators to make rational choices (Salovey and Mayer, 1990). Emotions affect rational decisions positively when persuasion is reinforced in negotiation to appeal negotiators in terms of emotions and instincts. Negotiators need to create a good emotional environment during negotiation by minimizing negative emotions and reinforcing positive ones. An average person is less likely to be affected by emotions than logic and reasoning. Therefore, negotiators should avoid emotions and use logic and reasoning in their judgment, while at the same time observing the emotions of other parties in the negotiation in order to respond appropriately.
Emotional Intelligence
Emotional intelligence is important when handling negotiations that are characterised by emotions. It is important in explaining the role of emotions in negotiation. There are four main abilities of emotional intelligence: using emotions, identifying emotions, understanding emotions and managing emotions (Salovey and Mayer, 1990). In terms of identifying emotions, negotiators consider the nonverbal reception and expression of emotion. Negotiators have to recognize emotions through facial expressions including happiness, sadness, fear and anger in order to determine how to negotiate under each emotional situation. The ability to identify emotions accurately through the face or voice is important in enhancing effective negotiation. For instance, if a negotiator notices that the other party frowns or raises his tone, then he identifies anger and gives him time to cool down before continuing the negotiation.
Use of emotions to guide thinking is also a key aspect of negotiation. It involves the capability of emotions to influence the cognition of negotiating parties; hence promoting thinking (Riva, 2006). Emotions enable negotiators to prioritize their choices or alternatives. This is based on the fact that people react emotionally to something that grabs their attention. For instance, if someone finds enjoyment in a certain thing, he gives it priority in terms of decision making. A system of good emotional input enables negotiators to focus on the most important things in the negotiation.
Understanding emotions is also important in negotiations. Emotions carry information. For instance, happiness shows that a negotiator is ready to join the other party while anger indicates that one party is ready to attack or harm the other party. Therefore, a negotiator will be motivated to continue with the negotiation if the other party is happy, but can be de-motivated to continue with the negotiation if the other party is angry. If one party recognizes that the other party has some fear, then he or she will know that the other party is almost running away from the negotiation. In this case, he or she takes appropriate measures to alleviate the fear in order to keep the other party in the negotiation for a while longer.
Managing emotions is the other branch of emotional intelligence as suggested by Salovey and Mayer (1997). In this case, a negotiator should remain open to some emotions to the extent that they are not harmful and block overwhelming emotions. Negotiators have to emerge from their emotional comfort zone and regulate their emotions and those of others in order to promote the personal and social goals of both parties in the negotiation. Emotional self-regulation plays a crucial role in preventing negative influence of emotions on negotiations.
Methods of Managing Emotions during Negotiations
Some of the mechanisms of managing emotions during negotiation include: obtaining release, seeking assistance, focusing, and taking positive responsibility (Adamatzky, 2005). In terms of obtaining release, a negotiator may ask the other party to postpone the negotiation for another day or allow them some time before restarting the negotiation so that they can cool down and regain their consciousness. For example, an angry negotiator may go out for some time to relax and consider his or her stand in the negotiation before continuing. The negotiator may also seek assistance from colleagues, mentors, role model or other people who are experienced in the field of negotiation (Adamatzky, 2005). For instance, a student may seek assistance from a friend or a teacher/tutor. Some emotions such as fear and anxiety can also be managed by focusing on the key issue being negotiated. This enables the negotiators to avoid being distracted by their emotions during negotiation.
Intense emotions in others can also be managed by listening, communicating respect, avoiding retaliation, stating one’s own feelings, and objectives, and giving the other person space (Volkema, 2006). Listening is important because it enables negotiators to understand the views and needs of the other person and address them adequately during negotiation in order to win them. The negotiator should also avoid paying back pr retaliating in order to maintain good relationship between the negotiators. The other person should also be given space to manage, control and exercise their own emotions so that they can make rational decisions (Volkema, 2006). Furthermore, all parties in a negotiation need to state their goals, feelings and objectives so that they know what to expect from each other in the negotiation. This prevents unnecessary emotions which usually arise from unexpected actions of the other party, e.g. fear and surprise. Therefore, emotions play a crucial role in negotiation and need to be managed effectively with a good level of emotional intelligence in order to enhance effective negotiation.
