Negotiation, Bargaining and Resolving Conflict in Financial Services
“Negotiation is the process of resolving conflict between two or more parties whereby both or all modify their demands to achieve a mutual acceptable compromise” (Kennedy et al., 1987). In an interpersonal relation there is always a risk of conflict. Negotiation is the process of productively managing conflict bearing in mind that conflict can be functional and can help towards greater work effort and in building relationships. Conflict is the natural disagreement resulting from individuals or groups that differ in attitudes, beliefs, values or needs. Business is all about getting, satisfying and keeping customers. Without sales there are no customers, and without customers there is no business. In the banking industry, sales relate to the negotiation of banking services with customers. Reaching a mutual acceptable sales agreement can be achieved through bargaining and through effective communication which is the essence of good customer relations. Negotiation in banking can be defined as: The process by which the involved parties resolve matters of dispute by holding discussions and coming to an agreement which can be mutually agreed by them. It also refers to coming to closing a business deal or bargaining on some product or service. The exchange of negotiable instruments such as bills of exchange and cheques in exchange of goods, service or money.
(Legal Explanations, Undated) Due to aggressive market competition, today customers have the luxury to shop around and to negotiate their demands. Acknowledging this fact, Financial Institutions are continuously negotiating with customers in an effort to build long term relationships rather than focusing on the short term period. In selling financial services we can identify 3 potential areas of negotiation: Negotiating with customers on selling financial services to satisfy their needs and demands focusing on: Bargaining and making concessions on customer demands in order to reach a mutual acceptable compromise, such as bargaining on a house loan financing and interest rate.
Resolving customer complaints (conflict) as a result of service dissatisfaction due to:
Negotiation Styles Selling financial services is all about negotiation and building long term relations with customers for mutual gain. Building relations with customers requires good communication and discussions with customers while caring for their interests. One has to keep in mind that “the customer is always right” as long as his demands are reasonable and justified. Negotiation is an art in itself and one needs to determine the best negotiation style to be in line with the organisation’s strategy. Below are 3 negotiation styles together with their respective behaviours for consideration. Soft Negotiation | Passive Behaviour | - Avoids conflict
- Makes concessions
- Too soft in negotiation
- Resentment feelings
- Exploited feelings
- Wants a quick solution to avoid difficult situation
| - Energy wasted
- Poor body language
- Apologises a great deal
- Place too much emphasis on feelings of others
- Stressed
- Avoids conflict
- Short-term goals
| Hard Negotiation | Aggressive Behaviour | - Battle of wills
- Extreme positions taken
- Manipulative
- Aggressive approach
- Not thinking of long-term relations
- Wants a quick victory
| - Energy wasted
- Bullying
- Erratic behaviour
- Short-term goals
- Poor communication skills
- May not have an eye for detail
- Manipulative
- Stressed
| Principled Negotiation | Assertive Behaviour | - Mutual gain
- No posturing or tricks
- Hard on the merits of the situation but soft on people
- Thinking of long-term relationship
- Emphasises interests
| - High energy levels
- Respecting yourself
- High self-awareness
- Able to make choices
- Confident communication and body language
- Internal integrity
- Healthy stress
|
(Exploring links between negotiating styles and assertiveness- building, Undated) | 
