Management Chapter 11 PDF

In this chapter we will cover the following topics: Topic 11.1 – Management vs. Leadership Topic 11.2 – Manager as Decision Maker Topic 11.3 – Manager as Communicator Topic 11.4 – Leading Individuals and Groups Topic 11.5 – Conflict Management Topic 11.6 – Negotiation The question of “the difference...

In this chapter we will cover the following topics: Topic 11.1 – Management vs. Leadership Topic 11.2 – Manager as Decision Maker Topic 11.3 – Manager as Communicator Topic 11.4 – Leading Individuals and Groups Topic 11.5 – Conflict Management Topic 11.6 – Negotiation The question of “the difference between being a leader and being a manager” has received much attention in the literature, both academic and professional. In real-ity, the differences are not as significant as some would suggest. To be a successful manager, a person also needs to have leadership skills. Managers are required to make decisions on a daily basis. Understanding the approaches to decision-making that a manager has available can help to improve the quality of those decisions. Communication skills are essential for managers. Understanding the purpose of communication as well as the process, methods, types of communication and ways to improve a manager’s communication skills are the ingredients for becoming a better communicator. Being a manager, by definition, means being responsible for supervising the activi-ties of others. Leading individuals and groups goes beyond simply providing guidance to those who report to you; it requires actions to motivate, inspire, and gain the sup-port of individuals inside and outside the organization. Understanding the necessary actions to develop this support is critical for developing this leadership skill. Conflict is an inevitable occurrence in workplaces. A manager must recognize the various types and causes of conflict and be savvy in knowing how to deal with these situations. There are various approaches to consider depending on the cir-cumstances. Choosing the right approach will help to resolve the conflict and create a more collaborative work environment. Being able to negotiate the big deal that helps make the organization successful is a challenge and an opportunity for a manager to demonstrate his/her value. The need to be an effective negotiator actually goes beyond these “landmark events” to simply being able to navigate the daily interactions a manager has with individuals both inside and out-side the organization. Understanding some basic concepts for being an effective negotia-tor will greatly improve the outcome of a manager’s interactions with key constituents. This chapter briefly covers each of these important topics and should help future managers to enhance their portfolio of leadership skills. There is much debate on the differences between leadership and management. However, when reviewing the under-lying arguments in the debates there appears to be more similarities than differences between these two roles. It may be more accurate to consider lower level supervisory roles as managerial positions and more senior level super-visory roles as leadership positions yet, regardless of the level in the organiza-tion, many of the activities and skills required of the supervisor at any level are similar, if not the same. Leadership is defined as the influence of a person over others (followers) as evi-denced by the followers’ motivation, loyalty, and high performance in support of the leader’s vision, goals, and/or direction. In trying to illustrate the contrast between a manager and leader, Sara Canady, a frequent speaker, author, and leadership coach suggests these differences: In order to get the “Right Work, Done Well!”, managers need to exhibit all the traits ascribed to leaders (above), as well as all the traits ascribed to managers (above). Thus, managers also need to be leaders in order to be successful. Unless a manager can motivate, engender loyalty, and achieve high performance from their subordinates, the manager is not going to be successful. Research on the topic of leadership has been extensive over the last fifty years. The challenge of finding the answer to “what it takes to be a great leader” contin-ues. At the same time significant progress has been made in better understanding the concept of leadership in an organization. The following is a summary of some of the major findings in leadership research: Leadership Effectiveness: Leadership Effectiveness is measured in two ways: 1. The overall performance of the organization for which the leader is responsible 2. The satisfaction of primarily the subordinates who report to the leader (though some researchers argue that satisfaction of the leader’s peers and boss/bosses should also be included in this measure) Character Traits Leadership Theory: In early leadership research much attention was focused on leadership traits or characteristics of leaders. These studies focused on personal traits such as gender, height, physical energy, and appearance as well as psychological factors such as authoritarianism, intelligence, need for achievement, and need for power. After decades of research, there is some agreement that three traits seem to differenti-ate people in leadership roles from others: Physical Energy, Intelligence greater than the average of followers led, and Prosocial Influence (the tendency to focus on helping others and society as a whole). Unfortunately, none of the three traits (individually or collectively) were significantly correlated to leadership effectiveness without inclusion of other factors (see below). Building off of this research the following related - but more specific - styles of leadership have been identified: 1. Charismatic Leadership: influences others through an engaging, persuasive, and attractive personality 2. Servant Leadership: builds support from subordinates by proactively supporting them in performing their roles successfully 3. Transformational Leadership: seeks to make significant change to the organization through espousing the vision, the goals, the plan, and the tasks to move in a new direction, as well as to communicate a persuasive rationale for changes, while seeking to link subordinates’ identity and self-interest to achievement of the goals in order to gain their support 4. Strategic Leadership: focuses on the vision and the strategies necessary to fulfill that vision for the organization while persuading subordinates to take the initiative to develop and implement the plans necessary to execute the strategies 5. Empowerment-Oriented Leadership: enables subordinates by providing them with the resources and authority to autonomously develop and execute plans aligned with the goals of the organization 6. Transactional Leadership: uses rewards and punishments and other forms of authoritative power to encourage desired behaviors from subordinates There are other theories of leadership that are combinations of the above the-ories or substantially similar with a different name. The above descriptions are intended to give a general sense of the different types of leadership styles. The result of the research on Behavior-Based leadership concluded that no con-sistent pattern of behaviors predicted leadership effectiveness or subordinate satis-faction without inclusion of other factors (again, see below). Contingency Leadership Theory: Given the limitations of Character Traits theory and Behavior-Based theory in pre-dicting Leadership Effectiveness, researchers tried to better understand the rea-sons for these limitations. Fred E. Fiedler put forth the “Contingency Theory” that suggested each of these prior theories were likely dependent on not only the char-acteristics or behaviors of the leader but also the leader’s “situation” or “context” Fiedler identified three main contexts that are important for evaluating the effec-tiveness of leaders: 1. Leader-Member (followers) Relations (LMR) – the extent to which followers like, trust, and are loyal to their leader. (Explanation: the relationship with followers is “poor” when subordinates neither like nor trust their leader, and would not remain loyal to him/her) 2. Task Structure – the extent to which the work performed is clear such that subordinates know what needs to be accomplished and how to accomplish it. (Explanation: when Task Structure is “low”, goals are usually vague, and subordinates are unsure of what they should be doing or how to do it.) 3. Position Power – the amount of legitimate, reward, and coercive power a leader has by virtue of his or her position in an organization. (Explanation: the power is “weak” when the leader does not have any of these forms of influence over subordinates) Using this model, the effectiveness of character traits and behavior-based leadership styles of the leader are modified by the “Context” in which the leader must operate. Fiedler then combined the analysis of these three “contexts” to determine if the leadership situation overall is favorable or unfavorable. Fiedler found that in unfa-vorable situations (poor LMR, low task structure, and weak position power), the posi-tive leadership Character Traits are less effective than in favorable situations. Fiedler further uses the model to address the Behavior-Based leadership theories and finds that relationship (person)-based behaviors are most effective in moderately favor-able leadership situations, whereas task-oriented leaders are most effective in very favorable as well as very unfavorable leadership situations (both extremes). See the chart below for a depiction of these results. Consequently, based on Fiedler’s work, the most effective leadership Character Traits and Behaviors are dependent on the specific situation (context) facing the leader. This is a similar conclusion to what we learned from the study of the Evolu-tion of Management in Chapter 2, where it was evident that management practices changed as the situations facing managers changed such that any given manage-ment practice may not be effective under different conditions. The significance of “Leader/Follower” Relations was further studied by Fiedler with the following findings: In high stress situations (when leader/follower relations are strained or the organization is struggling to achieve its goals), a leader’s use of their experience is more important than use of their intelligence to effectively deal with the stressful environment. Conversely, in low stress situations (where leader/ follower relations are positive and the organization is performing well), use of the leader’s intelligence is more effective. More recently “Leader/Follower(Member)” relations has been expanded to include more emphasis on the “interactions” between the leader and followers and not just the overall relationship. This theory is called Leader Member Exchange or LMX. The major difference in this research is the expanded analysis of the profile of the follower (subordinate) and how the types of interactions between the leader and the follower can influence the relationship. An example of the implications of these theories might be helpful. Marsha is a bright young, but inexperienced manager who was put in a leadership role over older, more experienced workers who are upset about the prospect of working for this newly appointed inexperienced leader. If the task structure in the organization is unclear and Marsha is given limited position power due to being relatively new and relatively inexperienced, she may start with strained relationships with her new direct reports and it will be very difficult for her to be effective in her leader-ship role regardless of her Character Traits or her Behavior-Based approach. Unfor-tunately, the “context” of her situation is likely to make it very difficult for her to be an effective leader. Leah, on the other hand, is the newly appointed leader of a department she has worked in for several years. She is admired for her intelligence, expertise, cama-raderie, and willingness to help others. Everyone in the department likes her and they were happy when she was selected to be the new leader. Employees in the department recognize that the leader has the primary authority for determining performance evaluations, raises, and recommendations for promotion. Prior lead-ers have put ineffective workers on probation and even ultimately dismissed one employee who was continually underperforming. The work the department does is well-defined with clear responsibilities and expectations for each employee’s role. It is a collaborative approach to getting the job done. Leah is likely to be able to use her leaderships skills effectively in her new role. The “context” of her situation is very favorable for success. Leadership and Emotional Intelligence Some of the most recent leadership research has focused on the concept of emo-tional intelligence in leaders. Daniel Goleman’s work over the last 25 years has brought to light, in both academic and professional circles, the importance of inter-personal skills in leadership success. His original model included “domains” critical for achieving high levels of emotional intelligence as depicted in the following chart: In a later interview Goleman talked about his more recent insights based on his continued research. He added “motivation” to the self-management module as motivation is a precursor to initiative. He also added “attention” as being important to both self-awareness and social awareness. “Attention” is the ability to focus on self and others. In assessing the importance of emotional intelligence to being an effective leader, he found that the leaders in the top 10 percent of leadership performers were differentiated from “average” performers primarily on the basis of their emo-tional intelligence ratings rather than differences in cognitive abilities or technical skills. This suggests that a higher level of emotional intelligence is key for a leader to achieve high performance. Summary Management vs. Leadership is likely to continue to be debated in academic and professional literature. Clearly, there is at least a significant overlap between these two aspects of organizational roles and many definitions of the role of management include leadership as a key component. Academic research has advanced the understanding of the topic of leadership through development of multiple theories but unfortunately it has been difficult to create strong links between the theories and actual leadership performance. The explanation for this dilemma appears to be the importance of the “context” or situation in which the leader is operating and its significant impact on leadership effectiveness. It also is complicated by the challenges of measuring a leader’s perfor-mance given all the other factors that could impact on that performance besides the leader’s traits or behavior. While early research identified intelligence as an impor-tant factor for leadership success, more recent research suggests that emotional intelligence may actually be more important than traditional forms of intelligence in predicting leadership success. One of a manager’s key activities is mak-ing decisions. Decision-making is about making a choice from a set of alternative options. There are several aspects to decision making: Some decisions are easy with an obvious best choice. Other decisions are not so easy with no clear best choice and often a lack of information or time to analyze the alternatives sufficiently. Some decisions will have major implications for years to come for the organization and for the individual(s) making the decision. Other decisions are inconsequential, with little impact on the decision maker or the organization. Some decisions are based entirely on facts and logical analysis. Other decisions are based on intuition and feelings. Some decisions are based on both. Some decisions are objective with the goal to be fair to those impacted by the decision. Other decisions are influenced by the bias of the decision maker(s) - whether intentional or unintentional. Some decisions are judged on the impact they have on the organization regardless of how they were made. Other decisions are judged on the process that was used to make them regardless of the outcome. Some decision makers are punished for making “bad” decisions no matter how well thought-out their choice. Some decision makers are rewarded for the courage to make “risky” decisions even if they did not turn out to be successful. Some decisions involve paradoxes or dilemmas, having to deal with multiple and conflicting options (for example, investing in development of new products versus optimizing current profitability). Such is the nature of decision making in a business. What can help an organization and its managers to make better decisions? While many management books describe a step-by-step approach to decision making including developing decision-making criteria, collecting data and informa-tion, consulting with others, identifying and evaluating the options and their conse-quences, and then choosing the best option based on the established criteria, the reality is that few decisions are made this way in business. Major decisions with sig-nificant implications and large commitment of resources often do follow this more structured approach but the majority of decisions made by managers do not have the luxury of time and focus necessary to process through all these steps. In these cases, the experience, intellect, and emotional intelligence of the manager are used in a less formal way to decide what to do. Rather than find the optimal decision, in most cases, the manager seeks a satisfactory decision, one that is good enough to address what needs to be done. Sometimes the best decision is not to make one at all. Asking the question of whether taking any action is really necessary is often a good option to consider when faced with a decision. If there is not an immediate need for action sometimes it is better to wait until more information is available or the situation resolves itself. Research shows that decisions made as a team generally have better outcomes than decisions made individually without consultation. Making decisions as a team can help limit individual biases and introduce more alternatives that may not have been considered. It can also help with performing analysis of the alternatives. While it is tempting to believe that the best decisions are made with all the data and evaluating every option, we have previously discussed the concept of “bounded rationality” that demonstrates that this is not common practice, nor is it practical. In some cases, computers and artificial intelligence programs can aid in processing large quantities of data and optimizing solutions given a set of criteria but not all management decisions lend themselves to this sort of analysis. For example, a deci-sion to forego profits in favor of social responsibility initiatives cannot be analyzed solely in economic terms. Another consideration is at what level in the organization should decision-mak-ing responsibility be delegated. The answer is that it depends on several factors including the knowledge and capability of workers at various levels, the type of deci-sions, the magnitude of those decisions and their impact on the organization, and the management philosophy of the owners of the business (the degree of control they wish to exercise over the business). While generally it is beneficial to dele-gate authority to the lowest level at which it can reasonably be managed, this is not always easy to determine, which is why most organizations have procedures that require a higher-level review of decisions based on the nature or the financial, and/or other impact of those decisions. Along with the delegation of authority often comes the accountability for the outcome of those decisions. If managers are ill-equipped or poorly qualified to make decisions they are expected to make, then this accountability can lead to adverse con-sequences for those managers. Understanding the potential consequences of poorly made decisions can encourage managers to seek assistance and support to help them to avoid making poor decisions that could have significant impact on their careers. Finally, the research shows that managers tend to overrate their ability to make good decisions. Recognizing this propensity can help managers to become more pro-active in evaluating their decisions and learning from both the good and the bad ones. Making decisions is a major part of a manager’s responsibilities. Understand-ing the issues, complexities, and consequences of decision-making is important to improving a manager’s skills. Many management recruiters rank com-munication skills as one of the most important attributes sought in potential candidates. What does it mean to have good communication skills? To answer this question, it is necessary to have a more in-depth understanding of com-munication and its role in a business setting. Communication is the sharing of infor-mation between two or more people. As we examine this topic we will expand on the: Process of communication Types and purpose of communication Methods of communication Importance of good communication for managers Ways managers can improve their skills as effective communicator Process of Communication The process of communication involves a “sender” who has an intent and a message they deliver through one of the methods of communication (see later discussion of methods), and a “receiver” who is the recipient of the message and forms an inter-pretation of its meaning and its intent. Communication is considered effective when the intent and the meaning of the message from the sender are the same as the interpretation of the meaning and intent by the recipient. Unfortunately, this does not always happen for several reasons. These include a poorly constructed mes-sage or an inappropriate choice of method of delivery, either of which can under-mine the goal of the communication effort. Other factors that lead to a breakdown in effective delivery and/or correct understanding include, differences in language and/or culture, mismatches in the expectations or prior experiences of a sender and receiver, or a poor relationship between the sender and receiver that may lead to misunderstandings or mistrust of the purported intent or message. Types and Purpose of Communication In business there are several types of communications. There are organizational com-munications (communications directed to a broad audience). There are interpersonal communications that are message exchanges between two or several people. Mes-sages may be directed to, or occur, between members of the same organization or between members of the organization and customers, suppliers, shareholders, government agencies, and others outside the organization. Communications can be intended to be a one-way process (sent with no response expected) or a two-way process (where the expectation of the sender is to create a dialogue with, or obtain feedback from, others). Communications may serve multiple purposes including: to inform, to influence, to persuade, to motivate, to initiate a dialogue, to obtain or to provide feedback, and to learn. In some cases, however, communications can serve other purposes which are generally considered less appropriate such as to intimidate, to coerce, to embarrass, to disparage, to create conflict, etc. Sometimes the outcomes of the communication process are intended, sometimes accidental. Methods of Communication Communications can be conveyed in verbal form (speech, discussion, statement, casual conversation, etc.) or written form (email, text message, letter, posted announcement via social media, podcast, etc.) Communications also occurs in non-verbal forms through postures, gestures, facial expressions, attire, eye contact (or not), or other ways. Importance of Good Communication for Managers In order to get the “Right Work, Done Well” a manager needs to understand the range of ways in which communication can occur and develop skills for both deliv-ering effective messages and accurately receiving messages. Without these skills the manager will be less able to provide instructions to subordinates, interact with peers, understand direction from their boss, influence customers, obtain feedback, negotiate deals, and to build the kinds of relationships that are necessary to be a successful manager. Ways Managers Can Improve their Skills as Effective Communicators When communicating verbally or in writing, it is helpful to start by identifying the goals and intent of the communication (what you would like the receiver to do and/ or how you would like them to react and/or respond to the messages). Then proceed to develop the specific messages to be sent. When developing the messages - clar-ity, intelligibility, and brevity are good standards to meet. Depending on the purpose of the message - empathy, concern, respect, a feeling of equality, and appropriate demeanor are important attributes of the message and its delivery. Keep in mind that “how the message is delivered” may be as important as the message itself. The non-verbal signals (whether you are the sender or receiver of the message) include demonstrating genuine interest, willingness to listen, and offering positive reception through facial expression, eye contact, and body posture. Finally, when you are the receiver, active listening skills that include asking ques-tions, paraphrasing what you heard, and generally checking with the sender to make sure you are understanding the message correctly should be the starting point before responding, offering feedback, or providing critique on the content. Offering negative feedback should focus on the content of the message and not be directed at the sender of the message. In addition, it may be wise to ask the sender if they are seeking frank feedback before offering it. Effective communication is a vital skill for managers. It is an area where there is always room for improvement. Understanding the nature of communication, work-ing on improving your communication delivery and reception, and ongoing reflec-tion and analysis of successful and unsuccessful communication experiences are keys to developing this skill. As a manager, one of your key roles is to supervise the activities of those who report to you. But your responsibilities do not stop there. As we have discussed throughout this textbook your respon-sibility is to get the “Right Work, Done Well” and as a manager, you are depen-dent on other people inside and outside the organization to fulfill that responsi-bility. That includes not only the people who are in your chain of command but also your peers, your boss, and people outside the organization - customers, suppli-ers, and other constituents. How do you engage this broad group of people to sup-port your efforts to fulfill your purpose as a leader and manager? There are several actions successful leaders take to address this challenge. Those key actions include: Networking and Relationship Building Unwavering Commitment to a Moral Compass and the Vision/Mission of the Organization Demonstrating Emotional Intelligence Enabling Others to Succeed If you study leadership books, every author has their list of actions that they feel are important for leading others. To be transparent, this is my list since the empirical data on effective leadership does not share a consensus among the authors. All the actions above are on other authors’ lists, but they are not all on any one author’s list as far as I know. Let me briefly make my case as to why these four actions are critical. To evaluate this list, remember that the leader is dependent on their constituent’s support in order to get the “Right Work, Done Well”. Thus, any actions the leader takes should be directed at engaging those constituents in support of that purpose. People are more inclined to support those they know and have some sort of relationship with (Networking and Relationship Building). As they get to know the person, they are more likely to be supportive of him/her if they trust the person and know that that person is trying to accomplish something worthwhile (Moral Com-pass and Vision/Mission). Their willingness to act in a supportive manner is more likely to increase if they feel that person truly cares about them, empathizes with their challenges, recognizes their efforts, and works to make it possible for them to be successful (Emotional Intelligence, Enabling Others to Succeed). Thus, through these collective actions by the leader, constituents become motivated, maybe even inspired, to do what they can to support the leader in his/her work. Leading individuals and groups is an essential skill that every manager must develop. The actions outlined here can help a manager to develop the necessary skills to be successful in this endeavor. Dealing with conflict in the workplace is a situation that many managers are faced with more often than they would like! Understanding the reasons why conflicts arise and how to address them is the focus of this Topic. What are the reasons for conflict in the workplace? Conflict in the workplace can occur for many reasons: There can be a genuine dislike between two or more individuals in the workplace that has developed over an extended period of time that finally manifests itself in inappropriate behaviors towards each other and fellow workers. Individuals may be experiencing personal problems including anxiety, health issues, family issues, financial problems, or other difficulties that impact their ability to interact appropriately with coworkers, bosses or subordinates. The organization’s culture may be negatively impacted by recent management actions including lay-offs, corrupt activities, unfavorable news headlines, inappropriate behaviors, poor business performance, delayed compensation reviews, or other negative events. A manager’s “style” of leadership may be provoking tension and disruptive actions on the part of subordinates, peers, or bosses. Troubling external events in the news, vocalized political affiliations, vocalized religious affiliations, even obvious sports team affiliations can lead to heated discussions and emotional outbursts that degenerate into personal attacks (hopefully only in words but in severe cases, even in physical attacks). Management inaction to effectively respond to conflict in the workplace can encourage, rather than discourage, more conflict. Finally, some conflict is the result of genuine differences of opinion on strictly business-related questions and issues. While this is also a form of conflict, unlike the conflicts previously described, this form of conflict can actually be beneficial to the organization if managed properly. How should managers effectively deal with conflict in the workplace? Some researchers have suggested that dealing with conflict in the workplace accounts for a significant portion of a manager’s time. What steps should a manager take when dealing with conflict? Assess whether the conflict warrants immediate action or not. If the conflict violates established company policy, threatens violence, or constitutes potentially illegal acts then immediate action is required to intervene or to seek assistance from others. If the conflict between two parties doesn’t raise any of the concerns above, it may be beneficial to first determine if intervention is warranted or not. Sometimes parties are able to more effectively work out the conflicts by themselves, and their resolution may result in stronger outcomes than if management had intervened. A debrief of events afterwards with each party (separately) may be helpful if the parties were not able to reach a resolution in an effort to lay out a path for taking a more professional approach. If intervention is necessary, seek to diffuse the tension by finding a neutral location and allowing some time to pass so each person has the opportunity to calm down and regain some composure. Ask the parties to the conflict if they want your assistance in resolving the conflict or would prefer to work it out themselves in a more professional manner at a later time after they had a chance to reflect on what took place. Assess the likelihood of continued conflict between the parties and seek assistance from professionally trained counselors if necessary to help diffuse the tension. If you are directly involved in a conflict with another employee, suggest the need to take a break and resume the discussion at a later time. Consider asking other employees or trained professionals to participate in the later discussion to assist with working toward a resolution to the disagreement. If conflict is the result of personal differences unrelated to disagreements over business activities, suggest that this sort of discord is not appropriate for the workplace and focus attention on the importance of being able to collaborate on business-related matters regardless of other differences that may exist between you and the other person. If in the role of a manager you are addressing inappropriate behavior by a subordinate, focus the discussion on addressing the behavior of the subordinate and not on the character of that person. Make clear the behavior is inappropriate and cannot be continued without more serious consequences. Describe what those consequences could include. Be willing to listen to the subordinate’s explanation for the behavior but avoid taking sides and be clear that regardless of the explanation, the behavior is still not appropriate and cannot be repeated. Discuss a plan for addressing and correcting any issues that were created by the behavior. Discuss the potential need for the subordinate to get professional assistance to address the causes of the behavior, particularly if it is due, in part, to circumstances occurring outside the workplace. Agree on a follow up plan to confirm that the behavior has not been repeated. In some cases, it may be best to refer the matter to Human Resources or other professionals to address the situation especially if there is an indication that the person is suffering from depression, drug or alcohol use, or mental illness. Addressing the cause of conflict in these types of situations goes beyond the skill set expected of managers and if handled improperly could cause more serious outcomes for both the manager and the employee. Finally, when conflict arises over business related issues, as a manager, seek to listen to the arguments put forth by all sides before offering comment. Show impartiality and objectivity and acknowledge the legitimacy of the various viewpoints as a positive contribution towards seeking the best solution. Focus on gaining agreement on the criteria to be used to make a decision before addressing the merits of any particular argument. Focus on the substance of the options, not the individuals who proposed them, during the evaluation phase. As the last step, work to build consensus for the best option, if possible, by integrating solutions from both perspectives and by acknowledging/addressing the concerns of both parties. Conflict resolution is a common challenge faced by managers. Understanding the reasons for conflict and how to resolve conflict is an important skill for manag-ers to develop. Negotiating is an important part of a manager’s job. It is not just about being able to negotiate the great deal on a big contract but more often being able to effectively handle the interactions with colleagues, subordinates, bosses, suppli-ers, customers, and others that are part of the daily routine of managers. Negotiation is an important skill that managers must develop. Understanding some key concepts will help improve a manager’s negotiating skills. These include: 1. The importance of preparation 2. Understanding the source of power in negotiations 3. The distinction between positions and interests 4. The tension between creating value and claiming value Let’s examine each of these concepts in a little more depth. The Importance of Preparation To effectively negotiate requires understanding what your goals and target outcomes are for the negotiation, what issues are important to you and your business as the manager, what are your sources of power for persuading the other side, what alternatives do you have to making a deal with this person/ organization, and what can you offer and what do you plan to offer to the other side as incentives for achieving your ideal outcome. 2. Understanding the Source of Power in Negotiations The source of power in a negotiation often derives from understanding your BATNA or Best Alternative to a Negotiated Agreement. According to Fisher & Ury, two renowned researchers in negotiation, if a proposed deal does not meet or exceed the value that could be gained from your BATNA, then no deal should be reached. Cohen, et. al. discuss the “Agreement Trap” where there is a bias towards reaching an agreement even when the BATNA offers a supe-rior outcome. Sometimes this occurs because of irrational escalation of com-mitment. This concept described by Bazerman and Neale occurs when the participant in a negotiation invests considerable time and effort in ongoing negotiations and/or defends the importance of reaching an agreement with others leading to a sense of commitment to making a deal. Because of these “investments”, the negotiator may be inclined to make any deal even when that deal may not be in their best interest or the interests of the organization they represent. 3. The Distinction Between Positions and Interests Positions are the stated requirements of a party to a negotiation. Interests go beyond those statements to the underlying goals that could be achieved from the two parties reaching an agreement. The process starts by clearly under-standing your own interests and goals. This should be followed by a search for understanding the interests of the other party. This requires the ability to see the opportunities and satisfaction of interests that a negotiated agreement might provide from the other party’s perspective. Asking the other party what they might want to accomplish, what needs they may have that they are hoping to address, or what alternatives they are considering, can help to unlock a better understanding of these “interests” and by so doing, lead to an expanded set of options to consider in structuring an agreement. The Tension Between Creating Value and Claiming Value Negotiations are often approached as win-lose outcomes with the better negotiator getting the better outcome. This perspective to negotiating is about “claiming value” or optimizing the outcome in favor of one’s self at the expense of the other party. In a negotiation with the goal of “creating value”, options are considered that maximize the mutual benefit of the par-ties often in a way that results in both parties being better off than either party would have been in a win-lose negotiation. This can be accomplished by trading things that may be of less value to you but of greater value to the other party in return for the things you value most. In this way, both parties wind up better off. Another variation of the “claiming value” concept occurs when the outcome might not be as favorable economically to one party as conducting a strictly “win-lose” negotiation, but other benefits accrue from reaching an agreement that over-all provides a better outcome by having the party that would have been the loser in the “win-lose” scenario being more committed to the success of the arrange-ment. The benefits from agreements are sometimes realized in the relationships that are built between the parties and the sense of trust that develops, rather than solely from the formal conditions outlined in the contract. Agreements reached that were coerced or clearly not in the interest of one of the parties often lead to conflict and other problems when it comes to enforcing those agreements, espe-cially when ongoing collaboration is important for those agreements to be imple-mented successfully. In summary, successful negotiation is a routine part of a manager’s responsibili-ties. A manager’s ability to negotiate effectively is a critical skill for success. Under-standing the key concepts described here for successful negotiations is essential for building those skills.