Main Negotiating (DK Essential Managers)
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ESSENTIAL MANAGERS NEGOTIATING ESSENTIAL MANAGERS NEGOTIATING Written by Michael Benoliel and Wei Hua Senior Art Editor Gillian Andrews Project Editor Hugo Wilkinson Designer XAB Design Editor Louise Tucker UK Editor Sam Kennedy US Editors Margaret Parrish, Jill Hamilton Managing Editor Stephanie Farrow Senior Managing Art Editor Lee Grifﬁths Production Editor Nikoleta Parasaki Production Controller Mandy Inness Jacket Designer Mark Cavanagh Design Development Manager Sophia M.T.T. DK Delhi Senior Art Editor Govind Mittal Art Editor Vikas Chauhan DTP Designer Vishal Bhatia First American Edition, 2009 This American Edition, 2015 Published in the United States by DK Publishing 345 Hudson Street New York, New York 10014 A Penguin Random House Company 15 16 17 18 19 10 9 8 7 6 5 4 3 2 1 001-275336-May/2015 Copyright © 2009, 2015 Dorling Kindersley Limited All rights reserved Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise), without the prior written permission of both the copyright owner and the above publisher of this book. Published in Great Britain by Dorling Kindersley Limited. A catalog record for this book is available from the Library of Congress. ISBN 978-1-4654-3416-6 DK books are available at special discounts when purchased in bulk for sales promotions, premiums, fund-raising, or educational use. For details, contact: DK Publishing Special Markets, 345 Hudson Street, New York, New York 10014 or SpecialSales@dk.com. Color reproduction by Colourscan, Singapore Printed in China www.dk.com Contents Introduction 6 Chapter 1 Preparing to negotiate 8 Becoming a negotiator Understanding negotiation dilemmas Being prepared Designing the structure 10 12 14 18 Chapter 2 Setting your style Chapter 3 Conducting negotiations 40 Negotiating with power Making offers and counteroffers; Making concessions Being persuasive Managing impasses Avoiding decision traps Managing emotions Dealing with competitive tactics Closing the deal 42 46 48 50 54 56 60 64 66 24 Deﬁning negotiation styles 26 Deﬁning interest-based negotiation 28 Negotiating from the whole brain 30 Creating win-win deals 32 Building relationships 34 Developing mutual trust 36 Negotiating fairly 38 Chapter 4 Developing your technique 68 Negotiating as a team Dealing with many parties Negotiating internationally Using a coach Being a mediator Learning from the masters 70 74 80 86 88 92 Index Acknowledgments 94 96 6 / INTRODUCTION INTRODUCTION / 7 Introduction Negotiation is challenging, complex, and exciting, and requires a mixture of knowledge, skills, experience, and intuition. Each negotiation is unique and there is no single technique for improving your success. Thus, to be a successful negotiator, you should use a mixture of moves and countermoves, driven by the nature of the speciﬁc negotiating situation. This book describes various practices and techniques that can help to make you a more successful negotiator in every situation you face. Negotiating distills negotiation theory and practice to give you practical advice on how to become a successful negotiator. It addresses questions such as: “Should I make the ﬁrst offer?”; “How should I present and respond to offers?”; “How can I obtain concessions from my counterpart?”; and “How can I make concessions effectively?” It helps you understand and put into practice ways to analyze your and your counterpart’s power, and to increase your negotiating power by building winning coalitions. However, negotiating successfully goes beyond mastering tactics and strategies. It is also about having the right attitude and mindset, such as being diligent in your preparation and planning; being resilient in the face of multiple challenges; being creative by inventing mutually beneﬁcial options; and being ready to walk away from poor deals. By mastering these negotiating tactics and strategies, and by developing the right attitude and mindset, you will achieve superior results. Preparing to negotiate Negotiation is a skill that you can learn and develop through practice and experience. By framing the process correctly and by searching in advance for creative options, you will be able to ﬁnd solutions that satisfy the interests of all parties. A ING NE G O IAT OT R S G MM A N I C ND ILE BE TA ON D S I R DE IAT ED RE U N GOT AR TU E P C E N U PR TR ES ING H E T B ING N G SI DE OM 10 / PREPARING TO NEGOTIATE Becoming a negotiator Many people shy away from negotiation because they think it implies conﬂict. In fact, negotiation is what you make it. When undertaken with conﬁdence and understanding, negotiation is a creative interpersonal process in which two parties collaborate to achieve superior results. Seeing the beneﬁts When you become skilled in negotiation, you can be of real value to your organization. Negotiation allows you, for example, to secure cost-effective and reliable ﬂows of supplies, enhance the ﬁnancial value of mergers and acquisitions, settle potentially damaging disputes with government ofﬁcials or union leaders, and resolve internal conﬂict constructively. Negotiation is increasingly recognized as a core competency. Many companies develop their own approaches and methodologies, and offer training and mentoring programs for negotiators. 80% of negotiators start by assessing the other party Tip LEARN YOUR ART Developing the skills needed to be a successful negotiator can take time, so be patient. Try to learn from every negotiation you undertake, both for your organization and in your life outside work. BECOMING A NEGOTIATOR / 11 Understanding the basics Good negotiators are made rather than born. Although some may be naturally gifted and intuitive (possessing, for example, the ability to empathize with others), most have developed their principles and tactics over time and recognize that negotiating is a largely rational process. To be a successful negotiator, you have to feel psychologically comfortable in the negotiation situation. This means being able to tolerate uncertainty, deal with unexpected behavior, take measured risks, and make decisions based on incomplete information. You need to think about solving problems and creating opportunities rather than winning or losing: if you are confrontational, you are likely to have a ﬁght on your hands. And if you “win” there will necessarily be a loser, with whom you may have to work in the months to come. BUILDING A FOUNDATION Do’s Don’ts ○ Keeping an open mind to learning new techniques ○ Believing that negotiating is an innate ability ○ Treating negotiation skills as a mixture of rationality and intuition Negotiating from a ﬁxed viewpoint ○ ○ Developing trust slowly ○ ○ ○ ○ ○ Chasing haphazard opportunities Having a strategy and sticking to it Expressing empathy while negotiating assertively Appearing too eager Behaving assertively without expressing empathy 12 / PREPARING TO NEGOTIATE Understanding negotiation dilemmas The negotiating task is very complex because it embodies a number of fundamental dilemmas. To be successful in your negotiations, you need to understand the difference between the true dilemmas that you need to address, and the many myths that surround negotiating. Identifying true dilemmas Over time, a number of myths have evolved about the nature of negotiations. Many negotiators continue to hold to them, failing to recognize the difference between these myths and the real dilemmas they face. For example, it is a popular misconception that a negotiator must either be consistently “tough” or consistently “soft” if they are to be successful. In reality, effective negotiators do not need to choose between these approaches, but are ﬂexible and use a repertoire of styles. The ﬁve negotiation dilemmas THE STRATEGY OR OPPORTUNITY DILEMMA Unexpected opportunities sometimes arise in negotiation. It can be tempting to divert from your well-planned strategy, but be aware that this may distract you from achieving your objectives. Using processes Some believe that negotiation is largely an intuitive act, rather than a rational process. Many effective negotiators will use their intuition to a certain extent (to know the right moment to make a concession or present an offer, for example). However, most of the negotiating task requires systematic processes such as masterful due diligence, identifying interests, and setting clear objectives. Skilled negotiators are able to recognize the myths and focus their energy on the true negotiation dilemmas, balancing their approach and making the difﬁcult decisions needed to achieve the most successful outcomes in their negotiations. 40% of people think they are trusting, but in fact they mistrust others UNDERSTANDING NEGOTIATION DILEMMAS / 13 THE HONESTY DILEMMA How much should you tell the other party? If you tell them everything, they may exploit the information and take advantage of you, so you need to strike a balance between honesty and transparency. THE EMPATHY DILEMMA If you develop empathy with the other party, it may stop you from acting assertively and negotiating for your interests. Try to do both well—maintain good relationships, but protect your interests too. Skilled negotiators recognize the myths and focus on the true negotiation dilemmas THE COMPETE OR COOPERATE DILEMMA You must compete for the beneﬁts on the table, but also cooperate to create them with the other party. You therefore need to be skilled at both, to be able to create and then claim value. THE TRUST DILEMMA Trust is needed for a negotiation to move forward, but if you trust the other party completely, you put yourself at risk of being taken advantage of. Invest in building trust, albeit with measured caution. 14 / PREPARING TO NEGOTIATE Being prepared Your success in a negotiation depends largely on the quality of your preparation. Start by thinking through your position and your objectives. Having clear goals will protect you from making too many concessions and motivate you to perform better. Objectives should be speciﬁc, quantiﬁable, and measurable. Only then can they be used as valuable benchmarks to measure your progress during the negotiation process. Setting the limits You should always go to the negotiating table with clear answers to the following questions: why do you want to negotiate the deal? How will this deal create value for you? What are your “deal breakers”? What must you have from the deal, what would you like, and what are you willing to give away? There may be alternative outcomes that you would be willing to accept—what are they? Tip DO THE RESEARCH Information is power. Find out as much as you can about your counterpart before you sit down to negotiate. Knowing your objectives Tip VALUE THE ISSUES Draw up a list of potential negotiating points, starting with the most critical. Give each issue a value, and estimate the value that your counterpart is likely to place on it. Set your objectives high but not outrageously so. It is tempting to censor your aspirations, setting them too low to protect yourself from the prospect of failure, but in doing so, you will almost certainly achieve less than was possible. If you fail to set clear objectives, there is also a danger that you could get trapped in an “escalation of commitment”—an irrational urge to “win” the negotiation at any cost. Escalation of commitment is a real hazard in negotiation, and happens when you refuse to give up your pursuit of a negative course of action when the wiser choice would be to cut your losses and move on. Always set a limit for how far you are prepared to go and prepare an exit strategy (a means of walking away from the deal). BEING PREPARED / 15 In focus AVOIDING ESCALATION OF COMMITMENT It can be easy to fall into the trap of competing with the other party at all costs, to ensure that you get that “win.” For example, in the late 1980s, Robert Campeau, a Canadian businessman, made a hostile bid to acquire Federated Department Stores (FDS). Macy’s, a competitor of FDS, was also interested and a bidding war began between Campeau and Macy’s. Determined to win, Campeau kept increasing his already high bids to a point where he offered to pay an additional US$500 million. Campeau won the competition, but two years later he declared bankruptcy. This is a classic case of escalation of commitment, and a lesson for all negotiators in keeping a sense of perspective in their negotiations. Preliminary research ○ Who will come to the table? Research their personality and their history of negotiation. Have they been previously successful or unsuccessful and what approaches did they use? ○ What can you ﬁnd out about their negotiating style, life history, hobbies, and interests? ○ If you have more than one counterpart, do they share the same backgrounds and functional area, and are they likely to be united in their desired outcome? ○ Are they authorized to make binding decisions? If not, who are the “players” behind the scenes who will make the ﬁnal decision? Looking across the table A negotiator was once asked if he could formulate a proposal that took into consideration both his and his counterpart’s interests. He was puzzled. “Why should I care about the other party’s interests?” he asked. “His interests are his problem.” Such an attitude of blinkered self-interest characterizes the unprepared negotiator. In order to succeed, you not only need to understand yourself and your interests, but also the other negotiating party, and the situation as a whole. Ask yourself the questions listed above when preparing for a negotiation. 16 / PREPARING TO NEGOTIATE Understanding your counterpart It is important to understand the issues and interests of the other party before you start the negotiations. Negotiators come to the table because they each need something from one another, so you must identify your counterpart’s key issues and interests. How important is each one? Which are the deal breakers and which may they be willing to concede? Try to assess whether it is you or your counterpart who holds the power. What are your counterpart’s strengths and weaknesses? What is their level of information and expertise? How badly do they want to make a deal with you? Do they have other attractive options? Are they pressed for time? If you know that the other side has a tight deadline that you are able to meet, you may be able to negotiate a better price. Similarly, if you know that your counterpart has recently expanded production capacity, you may be able to gain better terms for larger volumes of orders. Can your counterpart walk away from the table and exercise a Best Alternative To a Negotiated Agreement (BATNA)? This term is used by negotiators to describe the course of action taken if negotiations break down. Thinking strategically Much of what occurs in the negotiating room is, in fact, determined by what happens outside the negotiating room. This requires you to think strategically about your situation in relation to the situation of your negotiating counterpart. For example, in some negotiations, you and the other party may be representing others. Make sure you are very clear Tip CONSIDER THE TIMESCALE Shape your negotiating strategy with respect to the timescale. You can be more blunt in a short, one-time negotiation than in a long negotiation that is part of an ongoing relationship. about the identity of your constituency, and that of your counterpart. What are their expectations for the negotiators and can you inﬂuence them? If there are several negotiating parties, analyze all of them and begin to think in terms of coalitions. With whom and how can you build a winning coalition and how can you block a threatening coalition? BEING PREPARED Advantages of knowing your counterpart ○ Better understanding of what can be accomplished. ○ Proposals are more likely to be accepted. ○ Ability to adjust your strategy as the situation changes. ○ Successful negotiations and superior outcomes. ○ Better trade-offs on the issues. / 17 25% of people in an international survey trust others. 78% of the Danish population trust each other, making Denmark the most trusting nation in the world. Tailoring your strategy Make sure that your negotiating strategy and behavior reﬂects the other party’s situation and approach. For example, in many negotiations, the other party is free to leave or join the negotiating table as they wish. In some cases, however, the parties are bonded together over the long term and cannot simply walk away, and your strategy should reﬂect this. Some negotiators prefer to negotiate away from the public eye, while others insist on keeping all stakeholders and the public informed. Consider which mode is more advantageous to you, taking into account the sensitivity of the issues, the history between the parties, and the legal and governance systems of each party. Some negotiation counterparts observe formal protocols in negotiations, while others are freer in what can and cannot be said. Take particular care to do your research when negotiating internationally to learn the formalities expected of you. 18 / PREPARING TO NEGOTIATE Designing the structure Before producing a blueprint for a building, an architect ﬁrst studies the functionality of the structure—the purpose it will serve. When you are planning a negotiation, you need to think like an architect and devise a structure and a process that will best ﬁt the purpose of the negotiation. Structuring your approach Every successful negotiation starts with a clear structure: deﬁned roles, agreed rules, a set agenda, and a schedule for action. A framework for the negotiation will most likely be suggested by each of the participants. It is then subject to negotiation and joint re-creation so that all parties are satisﬁed that it reﬂects their concerns. Consult with the other party before you negotiate to agree on all procedures that you will use. If you cannot agree on the procedures, it may be better to postpone or abandon the negotiations altogether. Negotiation starts with deﬁned roles, agreed rules, a set agenda, and a schedule Tip CREATING THE RIGHT TEAM In team negotiations, carefully consider the size and composition of your team so that you include all necessary skills and represent all key constituents. Basic ground rules These need to be agreed to with your counterpart. For example, is it acceptable to change negotiators in midstream? Are observers allowed? Is the meeting open or closed? How should people be addressed and how should priority of speech be given? What will be the course of action if you cannot reach an agreement? All parties should agree to listen respectfully to one another, attempt to understand the positions of others, and refrain from legal proceedings for the duration of the negotiation. DESIGNING THE STRUCTURE Making a framework Your agreed framework needs to be sufﬁciently ﬂexible to accommodate changes in circumstance, but should at least cover the elements below. / 19 A framework for the negotiation will most likely be suggested by each of the participants Elements of a successful framework An agreed venue Chinese philosopher Sun Tzu’s Art of War states that one should “lure the tiger from the mountain”—that is, make your counterpart leave their comfortable environment. Ask yourself how the choice of venue will affect you and your team. At the very least, ensure that you will have access to the necessary support (computers, secure phone lines, and the necessary advisers). A clear agenda This should include all the substantive issues and interests that you and the other party wish to negotiate. Clarify the level of importance of each issue and decide the order in which issues should be discussed. Some negotiators prefer to start with easy issues, others tackle everything together. 20 / PREPARING TO NEGOTIATE Managing processes Once you have an agreed framework in place, you also need to structure the processes that will steer the negotiation through its various phases. There are three distinct processes—the negotiation process, the temporal process, and the psychosocial process—that come together in any negotiation. Each requires a different set of skills. The negotiation process involves managing all the information and communications during the discussions, planning and replanning, coordinating efforts between negotiators, making moves and countermoves (all in real time), and making important decisions under conditions of uncertainty and time pressure. The negotiation process The temporal process The psychosocial process Structure the processes that will steer the negotiation through its various phases DESIGNING THE STRUCTURE 28 months is the average time it takes for countries worldwide to agree on terms for regional trade agreements Thinking straight The psychosocial process requires a sound knowledge of human behavior and an understanding that people will take on “roles” during negotiations. You need to be able to overcome barriers to rational negotiation and avoid psychological traps, such as the illusion of optimism, a sense of superiority, and overconﬁdence. Other hazards include a reluctance to reverse a decision that produces poor results or intense conﬂict, and competition between negotiators in the same team. / 21 Keeping time The temporal process involves managing time and the way in which the negotiation moves from one stage to the next by appropriately pacing the speed of each stage and synchronizing the actions of the negotiators. Many negotiations (and sales presentations) stall because the negotiators belabor points for too long and are unable or unwilling to move the process toward its closure phase. 22 / PREPARING TO NEGOTIATE Playing by the rules The purpose of processes and structures is not to constrain the progress of the negotiation, but to give you tools to resolve challenges or impasses. Having clear rules will allow you to: • Move from multiparty negotiations to one-on-one negotiations. • Change the level of negotiation, upward or downward. • Replace negotiators who are selfserving or too rigid. Avoiding common mistakes Never underestimate the risks associated with poor preparation: when you fail to plan, you plan to fail. The most common errors in forward planning include: CONFIRMATORY BIAS Do not ﬁlter out important information because it does not ﬁt with your existing points of view and beliefs. 38% of people believe what they read in quality newspapers; only 10% believe the tabloids AVAILABILITY BIAS It is very easy to ﬁnd information that is widely available. So make a real effort to uncover information that is obscure and not so easy to obtain. OVERCONFIDENCE If you underestimate your counterpart you will neglect to plan well. If you already think you know how a negotiation will end, you may exclude new sources of information and overlook creative solutions. DESIGNING THE STRUCTURE • Expedite the process by issuing a deadline. • Change the venue or schedule. • Conduct some of the negotiations behind the scenes by introducing a back channel. Never underestimate the risks associated with poor preparation: when you fail to plan, you plan to fail RELYING ON SECONDARY INFORMATION Always seek out reliable sources of primary information. By all means read industry report analyses, reports of management projections, and corporate annual reports, but consider that these reports may sometimes be inaccurate or biased. / 23 INFORMATION ASYMMETRY Do you really know as much as you think? To be safe, you should assume by default that you know less than the other party. UNDERESTIMATING RESOURCES In any negotiation you must be able to present supporting facts, anticipate how the other side will respond to your arguments, and prepare counterarguments. Do not underestimate how long it can take to assemble such information, especially if you require input from experts and colleagues. Setting your style There are many approaches to negotiation. Some negotiators advocate a hard-line, uncompromising style. But skilled negotiators know that you are more likely to achieve a satisfactory outcome by taking the interests of the other party into account and trying to create win–win deals, develop mutual trust, and build relationships for the future. T TI A ION ED GO AS NE B G T IN ES FIN ES ER E T D YL IN ST N G TI O N I OM N FI TIA FR IN E G LS D GO TI N B R A EA A D NE I E T N GO OL WI N– NE E W H I IP S TH SH GW N N I T T TIO EA US LA R E CR T GR AL TU D IN U L I GM BU PIN LY O EL A IR V F G DE TI N A I T GO NE 26 / SETTING YOUR STYLE Deﬁning negotiation styles Negotiators come to the negotiation table because they have needs that they believe may be fulﬁlled through negotiations. In order to fulﬁll these needs, negotiators use different styles and engage in a variety of behaviors that they trust will help them get what they want. Spotting different approaches Using the integrative style There are three styles of negotiation: In contrast to value-claiming negotiators, distributive, integrative, and mixed integrative negotiators believe that the motive. Negotiators that mainly use the size of the pie is not ﬁxed and can be distributive style view negotiations as a expanded, and that the negotiation competitive sport, a zero-sum game with process is able to produce a win–win a winner and a loser. Such negotiators solution. The integrative style of compete ﬁercely for the distribution of negotiation is designed to integrate the the outcomes (the size of the pie) and needs of all the negotiators. Negotiators engage in value-claiming behavior. engage in value creation behaviors. These negotiators use competitive They invest time and energy in building actions in an attempt to gain a win-lose relationships and nurturing trust, share outcome in their favor. They dismiss the information openly, and are cooperative, value of building relationships and trust ﬂexible, and creative. as naive, tend to make excessive demands and use threats to obtain concessions, and exaggerate the value of the small concessions that they make. They also conceal their needs, do not share information, do not look for possible creative ideas, and even use deceptive tactics. Mixed-motive style Distributive style DEFINING NEGOTIATION / 27 In focus RESPONSES TO DISTRIBUTIVE TACTICS If the other party is using a distributive win–lose approach, a negotiator who favors the win–win style must protect their own interests. Some respond with the same hard tactics, meeting toughness with toughness. However, since the win–lose negotiation style is most likely to produce suboptimal outcomes, it is advisable ﬁrst to try and inﬂuence the other party to move toward a more integrative style. Value claimants often think the other party is oblivious to their tactics, and so some negotiators inform the other party tactfully but ﬁrmly that they know what they are doing and that it doesn’t contribute to productive negotiations. If all approaches to dealing with value-claiming tactics fail, however, and if they do not require the deal, many negotiators will simply leave the table. 42% more value may be gained in a deal when zero-sum games are abandoned Tip TAILOR YOUR APPROACH Utilize all of the negotiation styles—distributive, integrative, and mixed motive—where appropriate, depending on with whom you are negotiating and what their negotiating style is. Using mixed-motive tactics Integrative style The true nature of effective negotiations is often mixed, requiring both cooperative and competitive tactics. The rationale for this is that, through cooperation, negotiators create value; they put money on the table. Following this, once value has been created and the money is on the table, the parties have to split it between themselves. In order to secure the most proﬁtable split, a negotiator has to switch from the cooperative mode to the competitive mode. 28 / SETTING YOUR STYLE Deﬁning interest-based negotiation Negotiators often make the mistake of turning the negotiation process into a contest of positions. Some are hard bargainers, thinking of the other party as an adversary; others take a soft approach, considering the other person as a friend and making concessions easily. Instead of utilizing hard or soft bargaining tools, effective negotiators tend to focus on the interests of both parties. Focusing on interests In interest-based negotiation, the negotiators come to the table with a clear understanding of what they want and why they want it, but also with an understanding that the other party has its own set of needs to fulﬁll. Knowing that both parties’ needs can be satisﬁed in multiple ways allows for the negotiation process to be more about constructive problem solving—that is, collaborating to ﬁnd out what they can do together in order to achieve their respective interests. Understanding reasons Focusing on interests concentrates on the “why” instead of the “what.” People always have a reason for wanting something. For example, imagine that you and your friend are arguing over who should have the last orange in the fruit bowl. Your friend may want the orange to make juice, while you may want it because you need the rind to make cake. If, rather than arguing, you talk about why you need the orange and uncover the underlying interests behind your respective positions, you will discover that one orange can satisfy both of you. AIM FOR JOINT GAINS Instead of limiting the thinking to only one or two options, work jointly to creatively explore potential solutions. FOCUS ON INTERESTS Make sure that you have a clear understanding both of your own interests and those of the other party. KNOW YOUR BATNA Make sure that you have a clear understanding of your Best Alternative To a Negotiated Agreement (BATNA see p.16)—the best option available to you if the negotiation process falls apart. DEFINING INTEREST-BASED NEGOTIATION / 29 Conducting interest-based negotiations People always have a reason for wanting something SEE BOTH SIDES Assess the situation from the other party’s perspective. This improves communication and helps the other party understand how they stand to beneﬁt from the deal. SEPARATE THE ISSUES Keep people issues, such as emotions, separate from substantive issues (such as price or delivery dates). EXCHANGE INFORMATION Before making any decisions, exchange information with the other party to explore possible solutions jointly. USE STANDARDS Base your negotiation on precedents, laws, and principles, rather than arbitrary judgments. This makes the agreement fair and makes it easier to explain the rationale to others. 30 / SETTING YOUR STYLE Negotiating from the whole brain We all think differently, and naturally bring our own “style” to the negotiating table. Understanding the strengths and weaknesses of your thinking style, and tailoring your approach to take into account the style of your counterpart, can greatly improve your success in negotiation. Understanding your own style Ned Herrmann, author of The Creative Brain, proposed that there are four thinking styles: the rational self, the safekeeping self, the feeling self, and the experimental self, which relate to dominance in different quadrants of the brain. Negotiating is a whole-brain task, requiring the ability to be diligent and rational (quadrant A activities), to plan and organize well (quadrant B activities), to interact well with others (a quadrant C trait), and to be bold and take risks (a quadrant D characteristic). Improving your style However, only four percent of the population is dominant in all four quadrants. So most negotiators have strengths and weaknesses in performing the negotiating task, and should work to improve their weakest areas. Negotiators who have limited abilities in the feeling self (quadrant C), for example, can improve by developing their emotional intelligence. A negotiator with limited abilities in the experimental self (quadrant D) can improve by taking creativity workshops. CHECKLIST... Utilizing thinking style differences in negotiation YES NO 1 Have you determined what your own thinking style is? ................ 2 Have you identiﬁed your weaknesses in negotiation and are you working to improve in those areas? ........................... 3 If putting together a team of negotiators, have you taken each person’s thinking style into account? Do they complement one another? .................................................. 4 Are you able to quickly assess the thinking style of others? ........ 5 Do you take your counterpart’s thinking style into account when negotiating with them? ........................................................... NEGOTIATING FROM THE WHOLE BRAIN Inﬂuencing others The whole brain model can sometimes help you to inﬂuence your counterpart negotiators. For example, if you believe that your counterpart’s strength is in the feeling self (quadrant C) and their A: THE RATIONAL SELF Individuals with brain dominance in quadrant A tend to be logical, analytical, fact-oriented, and good with numbers. / 31 weakness is in the rational self (quadrant A), you will be more successful if you connect to him or her emotionally by building the relationship, and not by trying to connect cognitively through long speeches or rational arguments. The four types of thinking styles B: THE SAFEKEEPING SELF Individuals with brain dominance in quadrant B tend to be cautious, organized, systematic, neat, timely, methodical, obedient, and risk-averse. C: THE FEELING SELF Individuals with brain dominance in quadrant C tend to be friendly, enjoy human interactions, engage in open communication, express their emotions, enjoy teaching, and are supportive of others. D: THE EXPERIMENTAL SELF Individuals with brain dominance in quadrant D tend to think holistically and see the big picture. They are also often creative, comfortable with uncertainty, future-oriented, and willing to take risks. 32 / SETTING YOUR STYLE Creating win–win deals Some negotiators talk about wanting to create win–win deals, but when they hit major roadblocks leave the negotiating table prematurely, thus missing out on an opportunity to make a good deal. Effective negotiators utilize techniques to ensure they can create win–win deals. Getting the conditions right Effective negotiations, unlike competitive sports, can produce more than one winner. However, it takes motivation by both parties to ﬁnd creative alternatives that fulﬁll their interests to create a win–win outcome. To promote win–win deals, effective negotiators focus on both the substantive issues of the deal (price, terms of payment, quality, and delivery schedule) and on formulating a social contract between the negotiators—the spirit of the deal. This involves setting appropriate expectations of how the deal will be negotiated, implemented, and revisited, in case future disputes arise. If, by contrast, negotiators believe that negotiations are a zero-sum game that must inevitably be won at the expense of the other party, a win–win deal is not possible. To promote win–win deals, negotiators focus on the substantive issues and on formulating a social contract CREATING WIN-WIN DEALS Bundling the issues Effective negotiators do not negotiate a single issue at a time because this implies that there is a ﬁxed pie and only leads to a win–lose scenario. Instead, they bundle several issues together. Trade-offs can then be made between negotiators because negotiators do not place equal importance on every issue. The principle of bundling issues involves placing an issue that is of high value to you (for example, price) with another that you consider to be of low value (for example, warranty). / 33 When you trade-off on issues, you can then keep your high-value issue (price) and give your low-value issue (warranty) away to the other party. The other party, in return, will allow you to have your high-value issue, because your lowvalue issue is, in fact, of a high value to them. If your low-value issue is also considered to be a low-value issue by the other negotiating party, then they will reject the trade-off. Therefore, it is important for you to know what the other party considers to be their high-value issues. WIN–WIN NEGOTIATING Do’s Don’ts ○ Negotiating on multiple issues simultaneously ○ Negotiating on only one issue at a time ○ Understanding what is important to the other party ○ Focusing exclusively on your own interests ○ Identifying and leveraging differences in the interests of and the risks to the other party ○ Ignoring differences in your counterpart’s interests and risks Capitalizing on risk You can also capitalize on differences in risk tolerance. Some negotiators are more comfortable with high-risk situations than others. As a win–win and risk-taking negotiator, it is possible for you to design a deal where you assume more risk and receive more beneﬁts while your counterpart, who is also a win–win negotiator but risk-averse (avoider), assumes a lower level of risk but receives fewer beneﬁts from the deal. Tip SHOW THE WAY If you are dealing with a win– lose negotiator who thinks that the idea of win–win deals is naive and unrealistic, show them how to create value and reach superior agreements by focusing on interests and bundling issues together. 34 / SETTING YOUR STYLE Building relationships Contract negotiators are typically task-oriented and pragmatic, tend to focus on negotiating speciﬁc issues, and do not invest in building relationships. Relationship negotiators, in contrast, invest ﬁrst in building good relationships before negotiating on speciﬁc issues. Effective negotiators need to be skilled at both approaches. Making a personal connection Making contact Today, more and more negotiators from the West value what Asian, Arab, and Latin societies recognized thousands of years ago—the high value of good relationships. Experienced negotiators invest in building relationships because good relationships “oil” the negotiation process and make it more efﬁcient. For example, former US Secretary of State James Baker has stated that he has seen this occur time and again—that once negotiators have a good relationship, even the most difﬁcult and conﬂictinducing issues have been resolved, simply because the negotiators were more transparent and ﬂexible in their dealings with each other. Effective negotiators know that, in the long run, good relationships are best built through face-to-face interaction rather than by talking on the telephone or corresponding via email. Where possible, try to create opportunities to socialize with the other party before the negotiations begin. This is not to talk about the negotiations and “discover secrets,” but rather to get to know the other person better and connect with them on a human level. The atmosphere of the negotiation process may be very different if you are not meeting your counterpart for the ﬁrst time at the negotiation table. Case study BEING PREPARED When US businessman Robert Johnson was looking for ﬁnancial investment to enable him to create a new cable channel, Black Entertainment Television, he did his homework. Before pitching the idea to John C. Malone—one of the industry’s biggest players—he learned about Malone’s business philosophy of believing in the entrepreneurial spirit and of individuals helping themselves rather than relying on others. When they met, Johnson was able to connect with Malone by highlighting their shared business values. This similarity provided a positive start for their successful business negotiations. BUILDING RELATIONSHIPS Interacting informally In your interactions with the other party, take advantage of any opportunities to express your appreciation genuinely and congratulate them for their achievements. Use small talk and humor where appropriate—taking opportunities to interact informally will help you build a relationship. Be cautious, however, and Thinking long-term You should also protect the “face,” or dignity, of others and treat them with respect when you are taking more from a deal than they are. This is especially helpful when you are trying to build long-term relationships. / 35 use “safe humor” so as not to offend the other party. Where possible, focus on the common ground between you. You may ﬁnd that similarities are personal (you may share the same hobby, for example) or ideological, such as a similar business philosophy. These ﬁndings offer a solid start for building a long-lasting, friendly, and constructive business relationship. In team negotiations, it can work well to include socially skilled negotiators in your team who can take greater responsibility for building lasting relationships, while other team members (contract negotiators) focus more on the speciﬁc issues. 36 / SETTING YOUR STYLE Developing mutual trust Trust is an essential component of success in all types of negotiation, whether business, diplomatic, or legal. Ambassador Dennis Ross, former US Coordinator of the Middle East, has stated that the ability of negotiators to develop mutual trust is the most important ingredient of successful negotiation, and that without it, negotiations fail. Understanding the beneﬁts Trust involves a willingness to take risks. It has to do with how vulnerable one is willing to make oneself to a counterpart. There are many beneﬁts to having trust between negotiators: it promotes openness and transparency, and makes the negotiators more ﬂexible. Negotiators who trust each other take each other’s words at face value and do not have to verify their statements. This reduces emotional stress and other transaction costs, and makes the negotiation process more efﬁcient. Trust also means that the likelihood of achieving good and lasting agreements is also higher. Tip TREAD CAREFULLY Although there are many beneﬁts to a trusting relationship, it is not always possible to build trust. Some individuals and groups are simply untrustworthy, so be cautious in your efforts to develop trust. Keeping your commitments Developing trust Building trust is difﬁcult but losing it is easy, especially if you break your commitments. The French diplomat Francois de Callier, who wrote the ﬁrst negotiation book in 1716, stated that a relationship that begins with commitments that cannot be maintained is doomed. Shimon Peres, the former President of Israel, has said that promises have to be kept, otherwise one’s reputation is at stake. Although people do sometimes make genuine mistakes and promises in good faith that they ultimately cannot keep, if you want to build trust, you need to make every effort to keep your commitments. Reciprocation is important for building trust. When negotiators offer information or concessions, they expect the other party to reciprocate. Without reciprocation, no further gestures of goodwill will be offered. With reciprocation, the negotiating parties will be able to ﬁnd ways to collaborate and create value for both. It is also important to be seen to be fair. As fairness is a subjective matter, however, make sure that you understand the standard of fairness that your counterpart adheres to. Past behavior is often used as a predictor for future behavior, so try to behave consistently. DEVELOPING MUTUAL TRUST Building your reputation One of the most important currencies negotiators have is their reputation. It may sometimes be tempting to maximize short-term gains by overlooking the long-term consequences, but experienced negotiators know that people prefer to do business with those that they trust, and guard their reputations ﬁercely. Examples of actions used by negotiators to build trust When Henry Hollis sold the Palmer House in Chicago to Conrad Hilton, he shook hands on Hilton’s ﬁrst offer of $19,385,000. Within a week Hollis received several offers more than a million dollars higher. However, he never wavered on his ﬁrst commitment to Hilton. / 37 In 1873, US ﬁnancial markets were in poor shape and “king of steel” Andrew Carnegie needed to cash in a $50,000 investment with J.P. Morgan. Expecting a $10,000 proﬁt, he asked Morgan to send him $60,000. Morgan sent $70,000—the investment had made a $20,000 proﬁt. 38 / SETTING YOUR STYLE Negotiating fairly Fairness is an important characteristic in negotiations. Negotiators need to believe that the negotiation process and its outcomes are fair, otherwise they may choose to end the negotiations without coming to an agreement, or fail to put the agreement into action. Ensuring fairness There are several categories of fairness that contribute to creating successful negotiations. Distributive fairness relates to the distribution of outcomes (the splitting of the pie). Negotiators use three different principles of distributive fairness: • Equality: this states that fairness is achieved by splitting the pie equally. • Equity: this states that the outcome • should relate to the contribution made by each party. Needs: this states that, regardless of their contribution, each party should get what they need. CLARITY Be certain that the ﬁnal decision is clear, without any potential misinterpretations. Ways to ensure that the pie is sliced fairly CONSISTENCY 35% of people in a survey assumed the pie was ﬁxed and did not consider all the factors that would increase it Make sure that you apply the fairness principles (equality, equity, or needs) in the same manner throughout the negotiation process. CONSENSUS Conﬁrm that all parties in the negotiation are in complete agreement on the method of slicing the pie. NEGOTIATING FAIRLY Creating a fairness frame In addition, a negotiator’s level of satisfaction and willingness to follow through with an agreement are usually determined by their perception of the level of fairness of the procedure (procedural fairness), and also the way they feel they have been treated by the other party (interactional fairness). SATISFACTION Make sure that all parties are happy with the results—they are then more likely to follow through with the agreement. Fairness is a subjective issue. When negotiating, if you ﬁrst deﬁne what you consider to be fair, you can then use this “fairness frame” as a bargaining strategy in your discussions with the other party. Alternatively, if you state the importance of fairness at the beginning of the negotiation process, it may encourage the other party to be fair. Deﬁne what you consider to be fair—you can then use this “fairness frame” as a bargaining strategy in your discussions JUSTIFIABILITY Make sure that all parties are able to explain why you are slicing the pie this way to someone else. SIMPLICITY Ensure that all negotiating parties can understand and describe the pie-slicing procedures you use to guarantee smooth implementation. / 39 Conducting negotiations The negotiation process is a strategic interplay between the parties on either side of the table. To be successful, you need to know how to build a strong position, deal with difﬁcult situations, inﬂuence your counterpart, and close your deals. O HP WE R T WI G D N I AN IAT S T R GO FE S NE O F FFE R S G I N E RO ION S K S M A U NT CE ON CO C E G SI V K IN A A U M RS ES PE SS G A N S I P AP IM BE R G T G IN ON NA I SI A C M DE NS NG I D TI O I O O M AV GE N I G IC S NA TH TACT I A M G W VE L I N T IT I AL A DE D E M PE E H CO GT N I OS CL 42 / CONDUCTING NEGOTIATIONS Negotiating with power Power is a central factor in determining the outcomes of the negotiation process. Effective negotiators understand that power is not static and thus engage in continuously assessing and enhancing it. It is, however, equally important to know how to negotiate when you do not have power. Understanding power sources INFORMATION BATNA RESOURCES NEEDING THE DEAL TIME SUNK COSTS SKILLS Having an attractive alternative (see p.16) to a negotiated agreement gives you the power to say “no” to a bad deal and walk away from it. NEGOTIATING WITH POWER Being well informed enables you to support your arguments and also to challenge the other party’s arguments. The less badly you need the deal, the more power you have not to settle for it. The party that has more resources—ﬁnancial, technological, or human—has more power. The more willing you are to let go of your sunk costs (such as ﬁnancial and emotional expenses), the more power you have. The fewer deadlines you are pressed with, the more power you have to wait and explore opportunities for better deals. Tip RECOGNIZE YOUR TRUE POWER The more skilled you are in the art of negotiation, the more power you have to produce better joint outcomes. / 43 Weak parties often underestimate their own power and overestimate that of powerful parties, so try to make an objective assessment of the amount of power you have. 44 / CONDUCTING NEGOTIATIONS Negotiating from a weak position If your position is weak, never share this information with the other party. New opportunities or information may arise at any point, which may strengthen your BATNA (see p.16) and your negotiating position. Even if your position is weak overall, try to identify any areas of strength you have and use them as leverage. Even the most powerful party will have some weaknesses, so try to discover these and target them. Never make “all or nothing” deals from a weak position—you may miss out on opportunities that would have arisen as the value of what you are bringing to the table increases during the negotiation process. Instead, make deals sequentially and in small chunks, to ensure that the other party will be more likely to recognize the added value that you bring to the table. Even if your position is weak overall, try to identify any areas of strength you have and use them as leverage Case study CREATING POWER When Thomas Stemberg, the founder of ofﬁce products retailer Staples, needed a new round of capital to expand his business, he went back to the venture capitalists who had already ﬁnanced the company. This time, however, they closed ranks and demanded a higher equity share than Stemberg was willing to provide. Determined to break the venture capitalists’ cartel, Stemberg sought alternative sources of funding—the pension funds, the insurance companies, and high net worth individuals— with which he could negotiate from a more powerful position. NEGOTIATING WITH POWER Tip USE LIKEABILITY AND INTEGRITY When in a weak position, do not underestimate the power of personal likeability. People do business with people they like and whom they can trust to keep their promises and deliver good value. / 45 46 / CONDUCTING NEGOTIATIONS Making offers and counteroffers Before you go into a negotiation, it is vital to plan your opening move. Do you open negotiations and make the ﬁrst offer or do you wait and allow the other party to go ﬁrst? Make sure that you have an opening offer in mind, and plan how you will respond to your counterpart’s offers. Knowing when to go ﬁrst Some experts suggest that you should not make the ﬁrst offer and should always allow your counterpart to go ﬁrst. Skilled negotiators, however, question the conventional “never open” rule. They choose to tailor their approach to each negotiation. How should you decide whether to go ﬁrst or second? You should present your offer ﬁrst when you are conﬁdent in the thoroughness of your due diligence and also when you suspect that your counterpart is ill-informed. By going ﬁrst, you will “anchor,” or set a benchmark, that will be used as a reference point for the counteroffer. If you are not fully informed, do not go ﬁrst. Consider the other party’s ﬁrst offer, do not respond to it, and do your due diligence. In some cases, two negotiators are equally skilled and well informed and neither wishes to go ﬁrst. Such cases often require the involvement of a trusted third party to act as a neutral go-between and get the negotiations started. You should present your offer ﬁrst when you are conﬁdent in the thoroughness of your due diligence In focus POSSIBLE RESPONSES TO TOUGH OPENING OFFERS It is easy to be thrown if the other party’s opening offer is extremely low. Effective negotiators make sure that they are not startled by a tough ﬁrst offer, and avoid making a quick, emotional reaction. It is vital that a low opening offer does not become a benchmark for the negotiation. Possible responses to low offers include rejecting the offer as unreasonable; asking the other party to revise the offer; or asking questions and probing the other party for justiﬁcations for the toughness of the offer. MAKING OFFERS AND COUNTEROFFERS / 47 Setting your offer Tip CONSIDER THE LONGER TERM If you are hoping to form a long-term relationship with the other party, do not take advantage if they make you a very low ﬁrst offer. You will generate goodwill and nurture the relationship if you instead respond with a counteroffer that is higher, but still reasonable to you. Whether you present your offer ﬁrst or second, how high should your offer be? Former US Secretary of State Dr. Henry Kissinger believes that a negotiator is better off starting with a high offer. Most negotiators, however, tend to negotiate ﬁrst with themselves and thus restrain themselves from making bold offers. They tend to justify their modest offers by thinking that their counterparts would not go for a higher offer. Experts today suggest that a seller who puts forward a high offer may risk his or her credibility and offend the buyer, who may very well walk away without even providing a counteroffer. Instead of coming up with offers that are either too high or too modest, it is often better to make offers that are bold and daring. Bold and daring offers are reasonably high, tend not to be acceptable, but are still negotiable. 48 / CONDUCTING NEGOTIATIONS Making concessions Experienced negotiators know that successful negotiations involve a certain amount of give and take, and are well versed in the process of making concessions. They tend to develop offers that leave room for concessions, as these are the oil that lubricates the making of a deal. Conceding in small steps Each negotiation event is unique, so there are no absolute rules for how to make concessions that apply to all situations. However, it is generally true that people like to receive good news or beneﬁts in installments, rather than all at once. Skilled negotiators, therefore, tend to make multiple small concessions in order to increase the level of satisfaction of their counterparts. Knowing what to concede Inexperienced negotiators often make a ﬁrst sizeable concession as an expression of goodwill. However, this can set the expectation that there are many concessions to be provided. Experienced negotiators, by contrast, tend to untangle the relationships from the concessions. Sometimes, in order to set the tone of reciprocating concessions, these knowledegable negotiators concede ﬁrst by making a concession on a minor issue. Wait before you make the ﬁrst sizeable concession. During this time, advocate for your initial offer and convey the idea that it is not that easy to make concessions. The second concession Tip WATCH YOUR TIMING Think carefully about the timing of your ﬁrst sizable concession. If you make it too soon after your initial offer, it will give the other party the impression that the initial offer was not a credible one. should be smaller in size than the ﬁrst and be a longer time in coming. Making concessions in progressively declining installments will then lend more credibility to when you ﬁnally say: “There is no more to give.” 30% of bargaining behavior is inﬂuenced by the behavior of others, not self-interest MAKING CONCESSIONS Making and interpreting concessions ENABLING RECIPROCITY Label the concessions you make as ones that are costly to you and then reduce your value. This sets up the expectation that you will receive a concession in return, implying value for value. USING CONTINGENCY If you suspect that your concession will not be reciprocated, offer a concession that is contingent upon the other party providing a concession in return. For example: “I will be willing to extend the terms of payment to 45 days if you will increase your order by 500 items.” SETTING BOUNDARIES Some negotiators put the deal at risk by asking for too much. Set boundaries for the other party by being clear and precise about what you can concede and what you absolutely cannot. SETTING RULES Sometimes negotiators make ﬁnal concessions but then withdraw them or make them contingent on receiving a new concession. Set a clear rule that a concession cannot be withdrawn, unless it was explicitly offered as a tentative or conditional concession. SPOTTING DEAL BREAKERS Some concessions are deal breakers: without them, your counterpart will walk away from the negotiation table. Try to distinguish these from valueenhancing concessions, which are demands that will get a better deal, but if not provided, would not result in the other party abandoning the negotiations. / 49 50 / CONDUCTING NEGOTIATIONS Being persuasive A successful negotiation process requires effective persuasion. When attempting to inﬂuence your counterpart, it is crucial to identify your moments of power and take advantage of them. Seasoned negotiators understand how to use appropriate persuasion techniques to sell their ideas to the other party. Inﬂuencing others Effective negotiators use a range of inﬂuencing techniques that take advantage of the natural responses of negotiators to certain types of information. For example, negotiators are generally more motivated to avoid losses than they are to obtain gains. Negotiators use a range of persuasion techniques that take advantage of the natural responses to certain types of information 50% of Americans do not believe what they see, hear, and read in advertisements BEING PERSUASIVE / 51 Emphasizing beneﬁts A group of home-owners in California was given the advice that “if you insulate your home, you will gain 50 cents a day.” Another group was told that “if you fail to insulate your home, you will lose 50 cents a day.” More home owners under the second set of instructions insulated their homes than under the ﬁrst set of instructions. Similarly, you are more likely to persuade the other party of the beneﬁts of your deal if you emphasize what they would lose if they don’t agree, not what they could gain if they do. Negotiators are generally more motivated to avoid losses than they are to obtain gains 52 / CONDUCTING NEGOTIATIONS Offering small concessions Making small unilateral concessions can be a successful way to inﬂuence your counterpart. Negotiators feel obligated to reciprocate, no matter how big or small the concessions are. Even a small concession on your part can help the other party to comply. The more beneﬁcial your concession is to the other side, the more likely they are to feel obliged to return the favor. 97% of people will agree to a request even if the reason does not make sense 98% of people will agree to a request if given a reason BEING PERSUASIVE Strengthening your hand with persuasion techniques USE SCARCITY It is human nature for people to want more of what they cannot have. When you present your offer to the other party, inform them of the unique beneﬁts you are offering that they would not be able to get elsewhere. GAIN COMMITMENT Encourage the other party to agree to an initially modest request. They are then more likely to follow up with their commitment by agreeing to your key demand to justify their past decision to say yes to you. GIVE A REASON People are much more likely to agree to a demand if you have given legitimate justiﬁcation for it. Try to give a reason that can be backed up with evidence, but using even a frivolous reason increases your chances of reaching agreement. GIVE “SOCIAL PROOF” People often use “social proof” when making decisions—they think that if many people are doing things a certain way, it must be good. Demonstrate how your product or service has been successfully used by others. LET THEM SAY “NO” Give the other party the opportunity to say “no” by making an outrageous demand, before retreating immediately and putting forward a more reasonable demand. This can also serve to make the other party feel obligated to make a concession. SET A BENCHMARK Negotiators who are not fully informed tend to compare the cost of an item to a reference point or benchmark. You can inﬂuence the way they make their decision by setting a benchmark for them. / 53 54 / CONDUCTING NEGOTIATIONS Managing impasses Negotiations do not always conclude with an agreement. You may encounter an impasse or a deadlock during the process. How should you deal with a deadlock? Should you leave the negotiation table, concluding that the process has failed, or should you encourage yourself and your counterpart to remain at the table and keep the negotiations going? Dealing with deadlock Skilled and experienced negotiators expect there to be impasses in the negotiating process. They anticipate deadlocks and develop counteractions to deal with them when they occur. They view an impasse as a natural ingredient in negotiations and do not give up easily in their attempts to reach an agreement. Impasses usually generate negative emotions and sometimes deep feelings of resentment. Prior to and during the negotiation process, you should always be sensitive to the other party’s concerns, feelings, and, particularly, their selfimage. Research has suggested that negotiators have an image to uphold and that negotiations are less likely to be successful when either or both parties are not sensitive enough to each other’s dignity, or “face.” You should always be mindful not to harm the self-image of your counterpart, and this is never more important than during critical moments of an impasse. 12% greater proﬁts are achieved when parties negotiate over a meal MANAGING IMPASSES / 55 MANAGING DEADLOCK SITUATIONS Do’s Don’ts ○ Anticipating potential impasses and planning in advance how to deal with them ○ Believing that you can just think on your feet if a problem arises ○ Being open-minded and ﬂexible, and ﬁnding creative solutions ○ Thinking that deadlocks always lead to “no deal” ○ Reacting calmly and using your emotional intelligence, because you know that deadlock situations can be resolved ○ Leaving the negotiating table early because you are deadlocked with the other party Oiling the wheels If you are facing an impasse, experts suggest that, in the intensity of the moment, you should ﬁrst take time out to cool down. This will help to defuse the emotional situation and you can resume the discussion at a later time. When you reconvene, start with any existing mutual beneﬁts. Impasses often occur after some progress has been made. So, it may be useful to frame the impasse in the context of what has already been achieved and highlight the potential losses to both parties if agreement is not reached. If you are still deadlocked, you may need to try expanding the pie. If you maintain a zero-sum, ﬁxed-pie mentality toward the negotiation, this will restrain your creativity in negotiating for the best deal. The purpose of negotiation is not to win an argument, but to ﬁnd solutions that would maximize the beneﬁts for both parties. Consider new ideas to help you reach agreement. Expand the issues you are discussing, but avoid making concessions. In this way, you may be able to overcome the impasse on one critical issue by adding another issue that is attractive to the other party. 56 / CONDUCTING NEGOTIATIONS Avoiding decision traps Most negotiators believe that they are rational. In reality, many negotiators systematically make errors of judgment and irrational choices. It is important for you to understand and try to avoid making these common errors, as they lead to poor decision-making. Making the right decisions Hot and cold coginition Understanding the decision traps that negotiators can fall into will help you avoid making the same mistakes yourself, and may allow you to use the other party’s errors to leverage your own power. There are many tactics and strategies you can use to avoid decision traps or to use them to your advantage. Psychologists have identiﬁed two approaches to decision-making: “hot cognition” and “cold cognition.” Highspeed, pressurized decisions use “hot cognition,” while logical, slow decisions use “cold cognition.” In high-pressure environments try to overcome your emotions and use “cold cognition.” Understanding decision traps may allow you to use the other party’s errors to leverage your own power Tip WATCH YOUR TIMING To keep from feeling that you have not made the best possible deal, never accept the ﬁrst offer that is made, even when it is a great offer. Always negotiate a little. AVOIDING DECISION TRAPS Strategies for decision-making Do not hesitate to reverse your original decision and cut your losses; create an exit strategy even before you get involved in the negotiation process. Set a benchmark that could give you an advantage when your counterpart is ill-informed, but be aware that they could do the same to you. Engage a trusted expert who will challenge your overconﬁdence in your ability to negotiate and put pressure on you to do a reality check. Make sure that your offer is based on solid research. When buying, demand a performance guarantee of the product. Invest time and energy in looking for information that is not easily available. You will often ﬁnd accessible information that can improve your position. Present information more or less vividly to inﬂuence others, but be wary of overvaluing information that is attractively presented to you. As a negotiator, be aware of how the other party frames the situation and presents its offers. Approach each negotiating event as a unique case. They are never identical. / 57 58 / CONDUCTING NEGOTIATIONS Understanding decision errors ERROR DESCRIPTION Nonrational escalation of commitment ○ Acting contrary to your self-interest by increasing your commitment to an original decision, despite the fact that this decision produces negative outcomes (“throwing good money after bad”). Anchoring and adjustment ○ Using a faulty anchor as a benchmark from which to make adjustments and decisions. An ill-informed home-buyer, for example, may use the seller’s asking price as an anchor for their counteroffer, rather than solid due diligence on home values. Overconﬁdence ○ Believing that you are more correct and accurate than you actually are. This leads to an overestimation of your power within the negotiation, the options open to you, and the probability of your success. The winner’s curse ○ If you settle quickly on a deal when selling, feeling that the “win” was too easy and that you could have gotten more from the deal. ○ If you settle quickly on a deal when buying, thinking “I could have gotten this for less” or “What is wrong with this item? I must have gotten a bad deal.” AVOIDING DECISION TRAPS / 59 ERROR DESCRIPTION Information availability bias ○ Making a decision based on limited information, even though information is readily available or would have been available if enough effort had been put in to ﬁnding it. Vividness bias ○ Recalling and assigning more weight to information that was delivered in a vivid fashion, and giving less weight to equally important, but dull, information. Framing and risk ○ Making decisions based on how the issues were framed (for example, a glass may be described as being half empty or half full). Risk-averse negotiators are more likely to respond positively to offers that are framed in terms of losses, for example, because they are afraid of losing out; risk-seeking negotiators, by contrast, will respond slowly, because they are willing to wait for a better offer. Small numbers bias ○ Drawing a conclusion based on a small number of events, cases, or experiences, believing that your limited experience allows you to generalize from it. 60 / CONDUCTING NEGOTIATIONS Managing emotions In the heat of a negotiation, the emotions you display can signiﬁcantly inﬂuence the emotions of the other party. Effective negotiators try to synchronize their behavior with the other person’s, developing an interpersonal rhythm that reﬂects a shared emotional state. Understanding the approaches There are three types of emotional approach in negotiations: rational (having a “poker face”), positive (being friendly and nice), and negative (ranting and raving). Of the three emotional strategies, the positive and rational approaches are more effective than the negative approach in achieving targets in an ultimatum setting. The positive approach is more helpful in building a long-term, constructive relationship than the rational or negative methods. POKER FACE Some negotiators believe that exposing their emotions to the other party makes them vulnerable and will result in them giving away too much of the pie, and so try to always keep a “poker face” when they are negotiating. They also believe that emotional displays may result in an impasse or in defective decision-making, or cause negotiations to end. MANAGING EMOTIONS In focus STRATEGIC USE OF ANGER Some negotiators successfully use displays of anger strategically to try to encourage the other party to agree to their demands. They aim to gain concessions from their opponent because the other party takes their anger as a sign that they are close to their reservation point. Inducing fear in their opponent pushes that person to cave in and agree. It sends the signal that they would rather walk away from the table without reaching an agreement than settle for less than what they want. The opponent may also wish to end the unpleasant interaction by giving in. BEING POSITIVE Some negotiators believe that displaying positive emotions enhances the quality of the negotiated agreement, because a good mood promotes creative thinking, leads to innovative problemsolving, and smoothes out communication. Negotiators with a positive approach use more cooperative strategies, use fewer hard tactics, engage in more information exchange, generate more alternatives, and come to fewer impasses than negotiators with a negative or rational mood. BEING NEGATIVE Negotiators who use the negative approach display anger, rage, and impatience to inﬂuence the other party. Anger is sometimes used strategically, but negotiators who are genuinely angry feel little compassion for the other party, and are less effective at expanding and slicing the pie than positive negotiators. They tend to achieve fewer win–win gains when angry than when they experience positive emotions. Angry negotiators are also less willing to cooperate and more likely to seek revenge. / 61 62 / CONDUCTING NEGOTIATIONS 85% of our success is based on our ability to understand human behavior Monitor and regulate your emotions You need to ﬁnd ways to empathize with the other party MANAGING EMOTIONS / 63 Using emotional intelligence When negotiators are emotionally overwhelmed, their mental capacity to negotiate effectively is impaired. To overcome this, you must manage your emotions intelligently. You need to be aware of the emotions you are experiencing and be able to monitor and regulate them, and you need to ﬁnd ways to empathize with the other party. When negotiating with any other group or individual, it is important to make a conscious attempt to modulate your irritation. For example, while it might be frustrating if your counterpart retracts from an earlier commitment, you could disguise your irritation and use the term “misunderstanding” instead of openly displaying your anger. ASK YOURSELF… Do I use emotional intelligence when negotiating? YES NO 1 Am I able to make an emotional connection with my counterpart, even if I do not know them very well? ....................... 2 Am I able to judge when my own emotions threaten to affect my ability to make rational decisions? ................................. 3 Can I manage my emotions to ensure that I am always effective? .............................................................................. 4 Am I able to react in a measured way, keeping my emotions under control, even if the other party is using value-claiming tactics or behaving in a manner that I do not agree with? .............. 64 / CONDUCTING NEGOTIATIONS Dealing with competitive tactics In competitive win–lose position-based negotiations, negotiators use various manipulative tactics to maximize their interests while disregarding the interests of their counterparts. They usually believe that these tactics are quite effective. Often, however, these tactics can backﬁre, escalating the level of negotiation or even leading to an impasse. Skilled negotiators recognize these tactical traps and know how to avoid and neutralize them. Competitive tactics and how to avoid them MAKING A HIGHBALL OR LOWBALL OFFER A negotiator assumes that you are not fully informed and tries to take advantage by making a very high offer as a seller, or a low offer as a buyer. Their objective is to replace the benchmark you have in your mind with one in their favor. To avoid: Be conﬁdent in your benchmarks and try to see clearly through this ploy. PLAYING GOOD GUY/BAD GUY One negotiator plays tough and uses aggressive tactics, such as threats and ultimatums. Another empathizes to make you believe that he or she is on your side. Neither is on your side—both are trying to maximize their own interests. To avoid: Focus squarely on protecting your own interests. DEALING WITH COMPETITIVE TACTICS / 65 APPLYING TIME PRESSURE The other party uses the pressure of time to try to get you to concede by setting tight deadlines for an offer, or using delaying tactics to reduce the time free for the negotiation. To avoid: Use your judgment to decide whether a deadline is real or not. SEPARATING THE ISSUES A negotiator insists on reaching an agreement on a single issue before moving on. This prevents you from bundling issues together and creating opportunities for trade-offs. To avoid: Negotiate multiple issues at once, stating that “nothing is agreed upon until everything is agreed upon.” USING EMOTIONAL BLACKMAIL A negotiator tries to intimidate or inﬂuence you by fabricating anger, frustration, or despair. They try to emotionally shake you and make you feel responsible for the lack of progress. To avoid: Use your emotional intelligence. Stay calm and centered, and try to steer the negotiations back on track. NIBBLING The deal is done, but at the last minute the negotiator asks for another small concession. Most negotiators concede, fearing that the last-minute demand might derail the deal if it is not fulﬁlled. To avoid: Remember that refusing to budge on a small concession at the last minute is not usually a deal breaker. 15.5 of 16 concessions were won in a survey when threats were made late in the negotiation 66 / CONDUCTING NEGOTIATIONS Closing the deal Closing the deal after reaching an agreement is the last but most critical part of any negotiation process. It is certainly not simple, and is not just about outcomes. It also has to do with building relationships and making sure that the negotiated agreements can be carried out smoothly. Closing the deal properly is especially important when negotiated agreements are complex and multidimensional. Preparing to close Before you close the deal, both you and your counterpart need to understand that the purpose of making the deal is not to sign the contract, but rather to accomplish what the contract speciﬁes. What goals is each party pursuing through the deal and what will it take to accomplish them? As you depend on each other to accomplish your goals, it is important to make sure that both parties are signing the contract wholeheartedly. Review both parties’ key interests and ensure that nothing has been neglected. It is quite possible for the other party to decide to overturn the entire deal if he or she feels pushed into an agreement without having their own needs taken care of. Considering implementation Treat closing as the start of a collaborative process between you and the other party. When closing the deal, make sure that neither party overcommits. How to ensure effective implementation Most negotiators underestimate the importance of implementation. If not considered, the intense process of negotiation can undermine your ability to achieve your goals after the deal has been signed. For example, if you have used hard negotiation tactics to push the other party to agree to the deal, the other party may feel, upon signing the contract, that they have been unfairly treated and sabotage the deal, or fail to deliver. Before you put pen to paper, discuss the implementation of the deal with the other party. What you agree must fulﬁll the needs of both parties if you are to ensure successful implementation Unless both parties have conﬁdence that the deal can be successfully implemented, there is no point in continuing the discussion. CLOSING THE DEAL / 67 Reaching agreement A written agreement usually marks the closure of a negotiation. The agreement, which includes solutions for both parties, may be summarized and you may ask the other party to sign this document. This is Share any concerns you have as the process progresses. Include all stakeholders in the implementation process. Continue to work with the other party until implementation is completed. the most simple and natural way to conclude a negotiation. Changes should be allowed after the agreement has been signed. In other words, if circumstances change, both parties should feel quite comfortable contacting the other party to discuss these changes. Upon mutual agreement, such necessary changes can be incorporated into the new agreement. Make sure you include this last point in the agreement, as a deal is not done until it is done—it is better to allow for some ﬂexibility than to force the other party to overthrow the entire deal, should the circumstances change. CHECKLIST... Closing a deal YES NO 1 Have you considered all possible stakeholders? ........................... 2 Have you clariﬁed the purpose of the deal? ................................... 3 Have you made sure that both parties understand what it takes to implement the agreement? ................................... 4 Have you built a relationship with the other party, to pave the way for future collaboration? ...................................... 5 Have you made enough arrangements for another team to implement the agreement, if another team is taking over? ........... Developing your technique However experienced you are at negotiating, there are always ways to improve your technique. Negotiating in groups, in an international arena, and using your skills to mediate conﬂicts all require a tailored approach to achieve the best results. T SA EA M GA Y TI N AN A I M T TH GO WI NE G IN AL S LY G D E R TI E TINONAL A PA I I T GO AT N E TE R N CH OA IN C A R TO IN G S DI A U E AM G OM N I FR S G BE NIN E R A R M A ST E L E TH 70 / DEVELOPING YOUR TECHNIQUE Negotiating as a team Many business situations are too complex for a solo negotiator to be fully informed about every aspect of the deal. In such cases, working in a team may give better results, though this requires a high degree of internal coordination and a smooth ﬂow of information between members. Deciding when to use a team Some negotiations demand a diverse set of abilities. In addition to sound negotiation and psychosocial skills you may need speciﬁc technical expertise, for example, in areas of law, drafting joint ventures, or the planning system. You may need to exercise leverage on your counterpart through the use of PR, or require a keen appreciation of politics and strategy to identify the multiple stakeholders in the negotiation and ﬁgure out their interests. If you lack any of these abilities, you will probably beneﬁt from the collective wisdom of a team. You may need speciﬁc technical expertise, for example, in areas of law, drafting joint ventures, or the planning system NEGOTIATING AS A TEAM Tip MAKE TIME TO PREPARE Make sure that you have enough time to create a cohesive, trustworthy team, and allow time to prepare your strategy as a group before you enter into a team negotiation. 3% of men in negotiations lied to men, but 24% lied to women You may need to exercise leverage In focus DECISION TIME Negotiating as a team begs the question of how to decide on a course of action. Broadly, there are three ways to reach a decision. The ﬁrst is unanimity, in which all team members agree on a given issue. This is a tough rule and not recommended for most situations. The second is the majority rule. / 71 The majority will decide and the minority comply with the decision. The hazard here is that the majority may impose a tough solution that the minority cannot live with. The third, and usually best, decision-making rule is consensus: making a decision that not all the team members agree with fully, but that all can live with. 72 / DEVELOPING YOUR TECHNIQUE Advantages and pitfalls Understanding the advantages There are many beneﬁts to negotiating as a team. Being part of a team provides for multiple creative trade-offs and options and has other advantages, too. Sheer “strength in numbers” makes a team feel secure and powerful and sends a clear message to the other party that you are serious about the deal. You are also likely to feel less pressured when negotiating as a team, and are unlikely to make too many concessions too early in the process. NEGOTIATING AS A TEAM Avoiding the pitfalls Working in a team can lead to a lack of focus and consistency, so appoint a chief negotiator to lead your team and agree in advance each member’s roles and responsibilities. Avoid falling into “group think,” when team members feel pressured to conform to an existing group mindset and reluctant to present ideas that conﬂict with it. It can also be easy for a team to create a false sense of cohesiveness: “us,” the good team, versus “them,” the bad team. If this happens, genuine conciliatory attempts made by the other party can be dismissed as dishonest “tricks” and rejected, resulting in missed opportunities to make a deal. / 73 74 / DEVELOPING YOUR TECHNIQUE Dealing with many parties Many business partnerships or deals involve agreements between three or more different parties, each with its own positions, needs, and goals. Negotiating in this environment requires dexterity and a constant eye on the pitfalls, such as coalitions between the parties opposing you. Balancing complex issues Multiparty negotiations are in many ways similar to two-party situations but require a wider set of skills to deal with their additional complexities, which include those listed here: Strategic complexity Multiple parties have many interests, and often conﬂicts of interest, between them. Each party has its BATNA (Best Alternative To a Negotiated Agreement, see p.16), which may change as alliances are formed. To be well prepared for a multiparty negotiation, you must constantly reassess your own and your counterparts’ BATNAs. Social complexity With more negotiators involved, the social context becomes complex. In a two-party negotiation, your focus is on one individual, but multiparty negotiations require you to understand, analyze, and build relationships with each negotiator. You must learn to resist social pressure and protect your interests, even when faced by a coalition of parties in the negotiation. Emotional complexity Negotiating in a multiparty context can be very taxing. Hold your emotions in check; emotional distress often results in poor decisions. DEALING WITH MANY PARTIES / 75 SUCCEEDING IN MULTIPARTY NEGOTIATIONS Do’s Don’ts ○ ○ Forming or joining coalitions ○ ○ Insisting on acting independently ○ ○ Being clear when you disagree ○ Monitoring the positions of all the parties Keeping quiet: silence may be interpreted as assent ○ Focusing on only one part of the negotiations Resisting group pressure to modify your core interests Informational complexity The number of parties involved produces multiple exchanges of information, proposals, and multiple trade-offs. You need to develop a solid information system that can record and recall all the information exchanged in the negotiation room. Settling too easily when faced by a coalition Procedural complexity The design of the negotiation process may be fraught with difﬁculty. Its structure, the rules of engagement, selection of venue, sequence of issues, and how decisions will be made, must be perceived to be fair. In high-value negotiations, it is wise to employ an expert to facilitate the process more effectively. Case study CHAIRING MULTIPARTY TALKS The central challenge for the Chair of a meeting is to gain the trust of the negotiating parties. Former Senator George J. Mitchell, US Senate Majority Leader, stated that in mediating the dispute in Northern Ireland, his ability to be effective ultimately depended more on gaining the delegates’ trust and conﬁdence than on his formal role and authority. The Chair should be clear about his or her role, introduce the agenda, introduce ground rules, provide parties with opportunities to express themselves, and distill common interests. The Chair should also regularly summarize the progress that has been made in the negotiation. 76 / DEVELOPING YOUR TECHNIQUE Building winning coalitions The moment there are more than two parties in a negotiation, there are opportunities to make coalitions. To protect your interests and remain in the negotiating game, one of your major objectives will be to think well in advance about offense (how to build a winning coalition) as well as defense (how to put together a blocking coalition). When attempting to build a stable coalition, there are three essential factors to consider. The ﬁrst is the issue of agreement. Some parties will agree and others will disagree with your vision and the strategies and tactics you plan to use to achieve it. Tip DIVIDE THE PIE Make it clear to your coalition partners how the beneﬁts—the proverbial pie—will be divided if you achieve your goals. The division certainly must be fair, but fairness does not necessarily mean an equal share. To build a coalition, there are three factors to consider DEALING WITH MANY PARTIES / 77 Gaining inﬂuence and trust The second important factor to consider when building a coalition is inﬂuence. Some potential partners may be highly inﬂuential and can use their positions of power to assist you in moving your agenda forward, while others will be weak and unable to help much. The third factor to consider is trust. Coalitions are temporary entities driven by self-interest, so partners are easily seduced to defect once the payoffs elsewhere become higher. Your main objective should be to recruit potential partners who are trustworthy and will remain loyal to the coalition. Tip GAIN POWER Consider building a coalition if you think you hold a weaker hand than one of your opponents. Being part of a successful coalition may help you shift the balance of power. 78 / DEVELOPING YOUR TECHNIQUE Recruiting coalition partners When building a coalition, start by identifying all stakeholders, both supporters and opponents of your objectives. Classify each one according to their level of agreement (high, medium, or low, on a scale from one to 10), the degree of inﬂuence they could bring to the coalition, and their level of perceived trustworthiness. First, approach your best potential allies—the parties who agree with your vision and agenda and are very inﬂuential and trustworthy. First, approach your best potential allies ASK YOURSELF… About forming a coalition YES NO 1 Do you know your agenda for the negotiation and what you are trying to achieve?................................................................. 2 Have you considered the main factors that you need to consider in building your coalition? ................................................. 3 Can you identify potential coalition partners that are most likely to work with you to allow you to fulﬁll your objectives jointly? .......................................................... 4 Should you sequence the recruitment of each potential coalition partner? ............................................................ 5 Do you know the best way to approach potential partners? .......... DEALING WITH MANY PARTIES / 79 Focus on the allies who agree with your vision Gaining allies Next, focus on the allies who agree with your vision and are trustworthy, but who do not hold positions of power at the moment; they may gain inﬂuence as the negotiation proceeds. Ignore the weak adversaries: those who disagree with your agenda and have little inﬂuence. At the same time, think how you could block your powerful adversaries. Can you make a coalition with one of their potential partners? Coalition partners are often motivated solely by gains. Once the gains elsewhere are higher, they may defect, so you should attempt to cement integrity within the coalition. One way to do this is to ask each partner to make a public commitment to the coalition, making it harder for them to defect. 80 / DEVELOPING YOUR TECHNIQUE Negotiating internationally In today’s global economy, ever more business deals are made across national borders. Negotiating international deals is a challenge because you must be familiar with the complexities of the immediate negotiation context, such as the bargaining power of the parties and the relevant stakeholders, as well as the broader context, which may include currency ﬂuctuations and government control. Understanding the differences You are likely to experience signiﬁcant differences in several key areas when you engage in international negotiation: Agreements Western negotiators expect to conclude the process with a comprehensive bulletproof legal contract. In other regions, and notably in Asia, memorandums of understanding (MOAs), which are broader but less substantial agreements, may be more common. Time sensitivity In countries in which a “doing” culture is prevalent, people believe in controlling events and managing time strictly. In some countries, time is not viewed as such a critical resource, and negotiations can be slow and lengthy. Degree of formality Negotiators from informal cultures tend to dress down, address one another by their ﬁrst names, maintain less physical distance, and pay less attention to ofﬁcial titles. In contrast, negotiators from formal cultures tend to use formal titles and are mindful of seating arrangements. NEGOTIATING INTERNATIONALLY / 81 Factors to consider in international negotiations POLITICAL RISK While some countries have long traditions of an abundance of resources and political stability, others have scarce resources and are marked by volatile political changes. IDEOLOGY In individualistic cultures like the US, the purpose of the business is to serve the interests of its shareholders, but in collective cultures, the business has a larger purpose: to contribute to the common good of society. CULTURE Different cultures have starkly different cultural beliefs about the role of individuals in society, the nature of relationships, and the ways in which people should communicate. These have a fundamental effect on how you need to approach a negotiation. INTERNATIONAL FINANCE Currencies ﬂuctuate and affect the balance of expenses and proﬁts. The stability of the currency your investment is made in affects the risk to you. Many governments also control the ﬂow of currency, limiting the amount of money that can cross their borders. BUREAUCRACY Business practices and government regulations vary from country to country. In some countries, the government bureaucracy is deeply embedded in business affairs, and businesses are constantly required to secure government approval before they act. POLITICAL AND LEGAL SYSTEMS Different countries have different tax codes, labor laws, legal philosophies and enforcement policies, laws that govern joint ventures, and ﬁnancial incentives for attracting business investments. 82 / DEVELOPING YOUR TECHNIQUE Negotiating in Asia Succeeding in any international negotiation means taking the time to understand the complex negotiating environment, being sufﬁciently ﬂexible to be able to change your ways of working if necessary, and learning to work within different governmental bureaucracies. The overall cultural and business landscape in Asia is especially unfamiliar to Western organizations. With the region’s rapid rise in economic prominence, however, every manager needs to be aware of how it differs. The Asian style of negotiation RELATIONSHIPS (“GUANXI”) EMOTIONS FAIRNESS TRUST FROM THE HEART FACE LEGALISM DECISIONS Tip BE PATIENT Indian negotiators are more concerned with getting good outcomes than with the efﬁciency of the negotiation process, and may negotiate for weeks or even months to get the best deal. Never put pressure on your counterpart to reach agreement more quickly or you may lose the deal. NEGOTIATING INTERNATIONALLY / 83 Chinese business leaders invest heavily in making interpersonal connections and creating a dependable social network, known as “guanxi.” They prefer to do business within their trusted network. The Confucian teaching xinping qihe, meaning “being perfectly calm,” makes it difﬁcult for Western negotiators to “read” their counterparts and to know where they stand. The concept of fairness is based on needs: those who have more should give to those with less. Asian businesses like to do business with trustworthy individuals rather than faceless organizations. The lengthy process of building trust is based on openness, mutual assistance, understanding, and the formation of emotional bonds. Dignity and prestige are gained when individuals behave morally and achieve accomplishments. Face is a formidable force in the Asian psyche that negotiators in Western organizations must be particularly aware of. You risk insulting your Asian counterpart if you emphasize penalties for not honoring commitments in detail. Contracts are short and merely a tangible expression of the relationships being created. They are not treated as “ﬁxed” legal instruments. Although Chinese and Japanese societies are hierarchical, they use the consensus style of decision-making. Lead negotiators refrain from dictating a decision in order to preserve relationships and give face to others. 84 / DEVELOPING YOUR TECHNIQUE Acknowledging differences Asian culture is characterized by concern for people’s feelings. It emphasizes interdependence, cooperation, and harmony, while Western culture tends to be more competitive and achievementoriented, and rewards assertiveness. Like Asian culture, in South America good relationships are vital, but so is emotional expression. Asian and South American societies tend to give a higher priority to collective goals; self-sacriﬁce for the good of the whole is a guiding principle. Also, there is a greater acceptance of unequal power distribution, and relationships are built based on differences of status, age, and gender. Tip MAKE A CONNECTION Present your partners with a long-term vision of the mutual beneﬁts of a deal, stressing your personal relationship rather than legal obligations. Asian and South American societies give a higher priority to collective goals; self-sacriﬁce for the good of the whole is a guiding principle Business people in China and Japan like to avoid uncertainty, preferring structured and clear situations in which they make decisions after careful evaluation of information Avoiding uncertainty Another cultural differentiator is the level of comfort of individuals in ambiguous situations. Business people in China and Japan like to avoid uncertainty, preferring structured and clear situations in which they are able to make decisions after careful evaluation of a large amount of information. Contrast this with some Western societies, where people are more comfortable with ambiguous situations and are prepared to make quick decisions based on a limited amount of information. In South America, people may be deliberately ambiguous to avoid being directly negative. Be aware too that there are differences in communication styles: Asians may be “high context” (indirect, implicit, and suggestive), while those from the West are “low context”—more direct and speciﬁc. Understanding emotions South American business people often seek to form close, friendly relationships at the outset of any negotiation. They may talk and express their emotions with a level of intensity that many Asian and European cultures avoid. NEGOTIATING INTERNATIONALLY The South American style of negotiation GREETINGS A close, personal greeting to every team member at the start of each meeting will make people feel valued and important. In South American cultures, being open and welcoming is part of professional life. EXPRESSING EMOTIONS Using expansive gestures and speaking loudly and with passion is considered usual in many conversations. Do not wait for a pause to join the debate—a continuous ﬂow of conversation builds bonds and deepens trust. FAMILY TIES Extended families form the core of South American society. Often there is limited distinction between personal and business life, so expressing interest in the families of South American colleagues and discussing your own family is important when negotiating. RESPECT Treating people with the correct level of respect in relation to both their role in a company and standing in society is equally important. A chain of command guides business processes, but at each level team members work together with mutual respect. AVOIDING CONFLICT The word “no” is rarely expressed in conversation. Refusing a request or being negative is considered impolite, so many South Americans will avoid certain subjects or use reserve and closed expressions to imply their true intentions. / 85 86 / DEVELOPING YOUR TECHNIQUE Using a coach Many negotiators have blind spots, hold false assumptions, and are prone to repeating their mistakes. Some people continue to fail to understand the other party’s perspective, are unable to convert positions to interests, or are unable to manage their emotions. Working with a coach is an excellent way to gain perspective on your weaknesses and strengths and develop your skills for greater success. Understanding the beneﬁts Many negotiators do not realize that they could improve their techniques. They continue to make the same type of mistakes because they ﬁlter information, hearing only what they want to hear, rather than absorbing the complete information that is required to perform well. Another self-serving trap is attribution. Negotiators often attribute problems in negotiations to their counterpart negotiators. An objective coach who is willing to challenge you can help raise your awareness of your limitations and improve your negotiating performance. 57% of people who thought they had been assertive in negotiations were seen as under-assertive WORKING WITH A COACH Do’s Don’ts ○ Embracing coaching as a way to become more successful ○ Rejecting an offer of coaching because you can’t improve ○ Respecting your coach’s assessment of your weaknesses ○ Believing that your coach doesn’t understand your superior approach ○ Using the feedback your coach gives you to improve your skills ○ Dismissing your coach’s advice because you know better USING A COACH / 87 In focus ROLE PLAY Scenario role play can be an effective method of preparing for negotiations. A coach can help you rehearse your role and make sure there are no gaps or weaknesses in your case and in the negotiation process. For example, the coach can help identify your BATNA or make sure that you are not too enamored with the potential deal to the extent that you are unable to walk away from it. Although it is impossible to perfectly script a negotiation process ahead of time, it is helpful to “know your destination and all the terrain” so that even if the other party takes the process off track, you can still ﬁnd a way to achieve your goals. Being assessed Fine-tuning your style When you ﬁrst work with a coach, they will make an assessment of your performance. This often starts with a 360-degree feedback session, in which your coach collects data from people you negotiate with, in order to identify your strengths and weaknesses. The coach may also “shadow” you in some actual negotiations, to take note of your existing performance. Witnessing you in action allows a coach to provide relevant and insightful suggestions for improvement. The key outcome from the diagnosis is for the coach to identify your patterns in beliefs and behaviors so that you have a higher level of self-awareness. The coach then works with you to identify the skill sets and attitudes you want to focus on throughout the coaching period. Coaches are experienced in diagnosing possible pitfalls in your negotiation styles, and can help you be proactive in preventing them from occurring. They can also help you to uncover issues and resolve them on your own. They can expand your repertoire of behaviors by trying out different approaches and styles with you. Coaches ask a lot of questions. A good coach helps the negotiator to test his or her own assumption