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Negotiation

Section 06:
Resolving Differences

Chapter 19:
Third-Party Approaches to
Managing Difficult Negotiations

© 2019 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
Adding Third Parties to the Two-Party Negotiation Process

Third-party intervention should be avoided as long as

negotiations have a chance to proceed unaided.
• When needed, interventions should be timely and thoughtful.
The negotiators may seek third-party intervention, or it may
be imposed by choice, custom, law, or regulation.
• In addition, informal third parties may impose on the situation and
bring a perspective from someone not in the dispute.
• As a rule, interventions not sanctioned by the parties are unwelcome
and ineffective.

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 Benefits and Liabilities of Third-Party Intervention
They provide stability, civility,
and forward momentum.
Other benefits include:
• Creates a cooling-off period.
• Enhance communication.
• Refocus on the issues.
• Repairs strained relationships.
• Establishes deadlines.
• Salvages sunk costs.
• Increases satisfaction and
commitment.
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Involvement is a signal that
talks have stalled.
It may signal the parties have
failed to build relationships.
• Especially true for arbitration.
• Arbitration surrenders outcome
control.
• Mediation and consultation
enhance resolution skills.
Each type of intervention has
its own advantages and
disadvantages.
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 When Is Third-Party Involvement Appropriate?

In general, negotiators initiate third-party involvement when

they believe they can no longer manage the situation.
• Intervention must be acceptable to both parties.
A list of conditions could warrant a third party’s involvement,
including intense emotions preventing a settlement.
• Negotiators should consider alternatives when deciding to engage a
third party – litigation, mediation, arbitration.
• Negotiators need to be aware of the interplay between third parties
and litigation, thinking carefully about their BATNA.

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 Figure 19.1: Continuum of Conflict Management and
Resolution Approaches

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Source: Adapted from Moore, Christopher W., The Mediation Process: Practical Strategies for Resolving Conflict. San Francisco, CA: Jossey-Bass, 5
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 Figure 19.2: Categories of Third-Party Intervention

Jump to slide containing descriptive text.

Sources: Adapted from Sheppard, Blair H., “Third-Party Conflict Intervention: A Procedural Framework,” in Staw, Barry M. and Cummings, Larry L.,
eds., Research in Organizational Behavior. Greenwich, CT: JAI Press, 1984, 141–90; and Thibaut,nJohn and Walker, Laurens, Procedural Justice: A
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Psychological Analysis. Hillsdale, NJ: Lawrence Erlbaum, 1975.
 Which Type of Intervention Is Appropriate?

Mediation is the most common and negotiators surrender

control over the process, maintaining control over outcomes.
• If involvement is necessary, use a minimally intrusive intervention.
Procedure-only interventions support negotiators with
guidance and assistance.
• Failure to use a third-party when appropriate is just as damaging as
using the wrong method or the right one at the wrong time.
Timeliness applies to uninvited interventions as well, to avoid
negative effects.
Interventions have negative consequences, use in
moderation.

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 Types of Third-Party Intervention

Third-party intervention may be formal or informal.

• Formal interventions are intentionally designed, in advance, and follow
a set of rules or standards.
• Used by judges, labor arbitrators, divorce mediators, referees, and group
facilitators.

• Informal interventions are incidental to the negotiation.

• A manager or friend may become involved in someone else’s dispute.

The proliferation of hybrid forms of dispute resolution has

blurred this traditional separation.

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 Formal Intervention Methods – Arbitration

Arbitration resolves a disagreement by having a neutral third

party impose a decision.
• Arbitrators may rule on a single issue or on a total settlement
package.
• Arbitration may be voluntary or binding and an arbitrator’s decision
may be freely crafted or constrained as in final-offer arbitration.
Used in labor relations or claims of contract violations.
• Most states have “lemon laws.”

• Unions use interest arbitration and grievance arbitration.

There are two distinct advantages.
• Imposes a clear-cut resolution and avoids cost of unresolved disputes.

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 Negative Consequences of Arbitration

The chilling effect.

• Parties avoid compromises – belief the arbitrator will split the difference.
The narcotic effect.
• When arbitration is anticipated, negotiators may stop negotiating.
The half-life effect.
• As the number of decisions increase, likelihood of satisfaction decreases.
The biasing effect.
• When arbitrators have perceived patterns of partiality.
The decision-acceptance effect.
• Parties are more committed if the decision is not forced onto them.

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 Formal Intervention Methods – Mediation

The objective is the same as arbitration, but mediation seeks

the objective by having the parties develop the agreement.
• Transformative mediation – negotiations see the other’s perspective.
Mediation is based on rules and procedures but mediators
have no formal power and do not resolve disputes.
• Effectiveness comes from empathy and encouragement.
Four conflict dimensions where a mediator should be
considered include the quality of the:
• Conflict, relationship, context, and process and issues.
Mediators are not powerless if they have access to resources
negotiators want, and they give disputants “face.”

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 When to Use Mediation

Two elements of mediation are integral to its success: timing

and mediator acceptability.
• Mediation is more successful if occurring when the parties are open to
receiving help – a phenomenon known as ripeness.
• An intractable situation is just on the verge of being addressable.

• Mediators may be certified, and they may bring skill, trustworthiness,

integrity, impartiality, and experience to the dispute.
• All of these may be required for both sides to find the mediator acceptable.

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 Mediator Models, Choices, and Behaviors

Mediators choose approaches they think will be effective.

• Context mediation, issue identification, positive framing of the issues.
There are three general sequencing of issues:
• Gradualism, boulder-in-the-road, and committee strategy.
Research on mediator style shows two orientations.
• Settlement orientation and problem-solving orientation.
• Two main types of mediators were deal makers and orchestrators.
The strategic choice model uses two variables to produce
four basic mediation strategies.
• Problem-solving, compensation, pressure, and inaction.

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 When Is Mediation Effective?

It appears more effective in situations of moderate conflict.

• And also during a hurting stalemate.
• Mediation was less effective when there was internal conflict or when
the parties differed on economic issues or outcome expectations.
Mediators may have to exert direct and indirect pressure on
negotiators to create a positive bargaining zone.
• They can influence the zone by asking each party what they think the
other party would accept and asking them to suggest a range of
outcomes they would accept.
Mediators should push for agreement when a positive
bargaining zone exists.

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 Formal Intervention Methods – Process Consultation

This is a set of activities that help the client perceive,

understand, and act upon events in the client’s environment.
• The objective is to defuse the emotions of conflict and improve
communication to help manage future disputes.
The difference between mediation and process consultation
is that mediators address the issues in the dispute.
• Process consultants focus only on communication and conflict
management.
The purpose is to create the foundation for productive
dialogue and teach conflict escalation prevention.

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 Process Consultation Behaviors

Their first step is usually to separate the parties and interview

them to determine each side’s view of the other.
• They work to ensure the conflict does not escalate.
They should possess attributes similar to other third parties.
• For the process to work, parties must manage their conflict processes.
Research studies contribute to a better understanding.
• Less effective when parties are in deep dispute.
• Ineffective for short-term relationships.
• May be ineffective for distributive, or zero-sum issues.
• Ineffective when conflict level is so high parties seek revenge.

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 Combining Formal Intervention Methods
Meditation-Arbitration (Med-Arb)
Using mediation as a first
step to arbitration should
facilitate conflict dispute.
• But only for final-offer
arbitration.
• Conventionally, parties would
wait for arbitration rather than
make concessions during
mediation.
• With final-offer arbitration,
mediation is an incentive to
relook at the current position.
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Arbitration-Mediation (Arb-Med)
This approach has three
stages.
• First, the arbitrator holds a
hearing and makes a decision,
keeping the decision secret.
• Mediation occurs next.
• If an agreement is not
reached, then the arbitration
ruling is revealed and is
binding.
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 Informal Intervention Methods

Other third-party approaches are possible, used informally.

A study concluded managers use one of three dominant
styles when intervening in a subordinate’s conflict.
• Inquisitorial intervention.
• A manager would exert high control over both process and decision

• Adversarial intervention.
• Managers would exert high control over the decision but not the process.

• Providing impetus.
• Managers would not exert control over the decision, and only a small
amount of control over the process.

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 Which Approach Is More Effective?

Managers appear to think they mediate when they exert far

more control over the outcome than mediators.
There may be a positive benefit if mediation was used more
often – but manager’s fail to recognize the opportunities.
While mediation may be preferable to autocratic decisions,
timing appears to be critical.
Third parties can influence conflict at three stages.
• The prevent conflict stage – conflicts are emerging.
• The resolve conflict stage – conflicts are emerged and managed.
• The contain conflict stage – ongoing conflicts are contained.

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 Alternative Dispute Resolution (ADR) Systems

From an organizational standpoint, a certain type and level of

conflict is healthy and advisable.
• But there are costs to ongoing, unresolved conflict.
American organizations began using formal ADR procedures
in the 1980s, providing fast, economical dispute resolution.
• Preventive, negotiated, facilitated, fact-finding, advisory and imposed.
Factors undermining ADR systems include the need to win.
• There are key design factors of healthy, effective systems: inclusion, a
positive culture, multiple access points, options and choices, and
support structures.

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 End of Chapter 19.

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© 2019 McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.