Negotiation Space

A fait accompli (accomplished fact in French) is a negotiating tactic, generally used by diplomats, but also used in business. The principle is that one party will take a surprise action to create a favorable negotiating position. This accomplished fact impacts the outcome of the negotiation.

The fait accompli tactic works because it creates action. Once something is done, it is hard to get it undone and therefore, the balance of power between the parties is altered.

What does a fait accompli look like in a typical business negotiation? Here are a few examples:

• Violate a patent, and then work on the settlement
• Start a lawsuit, then talk
• Have a machine installed, then reject it and ask for a credit
• Declare bankruptcy before entering a settlement negotiation

To some, pulling a fait accompli is an unethical tactic. If the other party tries this on you, there are ways you can counteract:

• Anticipate the tactic and protect yourself by contract
• Take your own aggressive action
• Never pay in advance without a security
• Start your own lawsuit.
• Make the costs high if the other party does something aggressive

Don’t let your negotiation deteriorate into a done deal even before you have started talking! Be wary of the fait accompli.

Have you ever had to deal with a fait accompli move? What have you done to counter it?

Can you counter a counter-offer or a final offer? Most of the time, the answer is yes, you can always counter. In a few cases, the last offer or counter-offer is really the final one. The other party is not going to change course, but in most cases, especially if there really is the will to reach a mutually agreeable deal, the final offer can be countered.

Dr. Chester L. Karrass says that you should not accept the final offer at face value, and suggests you test it.

To test the firmness of the “final” offer you can:

• Determine whether the other party is hedging
• Don’t overreact
• Provide a face-saving way out from the “final” offer
• Consider walking out
• Introduce new alternatives and solutions

Counteroffers are common in real estate and in job searches. In an article from Essortment about home selling counteroffers, the author provides this advice:
• Don’t respond immediately
• Think flexible
• Know your bottom line
Read the article here: http://www.essortment.com/home/homesellingstr_supa.htm

A final offer is often a game of chicken, to see who will be the first one to blink. It takes a good deal of confidence to counter a final offer, but it may be worth it in order to get a deal that is more suitable. However, sometimes a final offer really is final. You will either have to test it or accept it.

How do you counter a final offer?

Unfortunately, in the world of business negotiations, not everyone plays nice. Some parties will bring out dirty tricks to help them “win” or perhaps hopelessly deadlock the negotiation to avoid reaching agreement.

You don’t have to fall prey to dirty tricks—the first step is to learn to recognize unethical or dirty negotiating maneuvers. If the other party uses one of these tactics or maneuvers, you are dealing with dirty tricks:

Bribery maneuver: The unethical use of payoffs or collusion for the other party to get its way.

Missing person: An authority trick where the person who has the ability to grant final approval is deliberately absent

Blackmail: Basically, a threat, this is an amount maneuver where the other party says pay this or else!

Scrambled eggs maneuver: Deliberately creating confusion by throwing lots of issues and numbers.

Low balling: Providing a really low figure—an offer too good to be true—just to get into a negotiation.

Personal attacks: Deliberately attacking someone to destabilize the negotiation.

Stretchout maneuver: Where one party will deliberately extend the negotiations over a long period, in order to reveal uncertainties prior to agreement.

There are dozens of other dirty tricks, ranging from deliberately providing the wrong information to engaging in bait and switch. To protect yourself, the best thing is to be prepared for the other party to engage in unethical maneuvering so you can recognize something is amiss before you get too far.

What kinds of dirty tricks do you see most often?

Here’s a scenario: You have been in a business negotiation for several days. There are ten items on the agenda and you have been reaching agreement on each of them, albeit slowly. You come to the tenth item and you can’t reach an agreement. What do you do?

• Do you agree to disagree on the tenth item but declare you have a deal?
• Do you call the whole negotiation off?
• Do you agree to negotiate on the tenth item at a later date?

This is a common occurrence since there will be items that are harder to agree on than others. But should you allow hard issues, or issues where you are deadlocked, derail the entire negotiation? Perhaps the best answer is that it depends on what it is and how big an issue it really is.

If you can’t agree on an item now that will keep most certainly keep coming up in the future, then you should continue to negotiate until you reach agreement. This is especially important if you are in the process of negotiating a joint venture. As is reported in “The Rules of Alliance,” a BusinessWeek article about an upcoming alliance between Intel and GE, joint ventures have to respond to compatible, mutually-agreed objectives. The article says:

“But there is a powerful temptation for two companies that are strongly attracted to each other to rush things along, like teenagers with hormones raging. ‘You get impatient. You want to get moving. You’re excited,’ says Louis Burns, vice-president and general manager of Intel’s Digital Health Group [...] Often during negotiations, Burns notes, if two sides agree on nine points and are stuck on the 10th, they’ll let the 10th one slide and agree to revisit it down the line, if need be. But for joint ventures, he warns, ‘the problem is that the 10th point will come and bite you in the backside later.’”

Read the article here: http://www.businessweek.com/managing/content/aug2010/ca20100826_270920.htm

If you are discussing something that does not have the ability to impact the entire scope of the agreement, or that is deemed to be minor, then you should agree to disagree on the one issue, and revisit it later.

What are your thoughts? Please share your experiences in the comments.

Is there a point where you stop negotiating? The emphatic answer is yes. There is always a point in a negotiation where you stop negotiating.

In the best case scenario, you stop negotiating when you get to your Both-Win deal, and everyone is satisfied. However, there are times when you are not getting to any resolution, and you have to know when to stop.

When either party has made a final (read unchangeable) decision: Say you have decided to terminate an employee. He/she needs to go because you need a different skill set from what this employee offers (or what he/she can learn). There is no more room for discussion. The employee may try to negotiate with you: he/she will learn new skills, he/she will try harder, etc. You have made a final decision and you are not looking to have your mind changed.

When you have reached deadlock: Sometimes parties reach an impasse and cannot reach an agreement. Sometimes one party uses deadlock as a tactic to test the resolve of the other party. Although sometimes deadlocks make it easier to reach compromise afterward, sometimes they just mean the negotiation is not going anywhere.

When there is a reluctance to reach an agreement. Sometimes parties enter a negotiation without really wanting to negotiate. It may be a requirement that they attempt to negotiate a deal, but there is no will to do so. If either party is reluctant to negotiate, stop negotiating because the negotiation is going nowhere!

When there is unethical behavior going on: Bad faith and lack of integrity will not create a solid, workable agreement. If there is unethical behavior from either party, you will need to clear it up or you won’t be able to continue your negotiation.

When either party is found to have no authority: If the party you are negotiating with does not have the authority to enforce a decision, chances are the agreement will not stand.

When do you stop negotiating? Please share your views in the comments.

A good part of negotiation is being able to convince or persuade the other party to see it your way.

Every person has his or her own point of view. If you agree with the other person, there is no need to negotiate or persuade. However, when you have a conflict of viewpoints, or a disagreement, you may want to try to change the other person’s mind. It is important to remember that most people want to avoid conflict, and prefer cooperation.

According to Dr. Chester Karrass, there are several points to keep in mind when you are trying to convince others:

1. Listen more than you talk. This way you will be able to better understand what the other person/party thinks.

2. Avoid interrupting. Interruptions can lead to resentment.

3. Stay respectful—don’t get belligerent. Argumentativeness breeds defensiveness.

4. Be patient. Understand what the other person or party thinks before you bring up your viewpoint.

5. Repeat back. It’s a basic concept in education and works in negotiations too: repeat what the other person/party said to demonstrate you understood.

6. Identify the key point and stick to it. It is distracting and even counterproductive to discuss to many issues at one time/

7. Express your views in a positive manner. You are for something rather than against something.

What happens if you can convince the other party? It happens. Some viewpoints are held too closely and no amount of convincing will change them. Accept that differences will exist, and spend your energy working on areas where there is possibility for change.

On Negotiation Space, we like to share tips about what to do to improve your negotiation ability. Today, we are going to share what NOT to do: attack the other party on a personal level. It seems obvious that you should not engage in personal attacks, and yet many people have done it or have been victims of a personal attack.

Personal attacks have no place in a business negotiation because they tend to be counterproductive and are very rarely justifiable. Personal attacks are designed to put the other party on the defensive.

Often, personal attacks are used as a last resort, perhaps when someone is grasping at straws or feels like he/she has lost control. These are a few reasons that one party feels the need to attack another:

• To destabilize the other party
• To create or widen a split in the other party’s organization
• To discredit an expert
• To bully the other party into a decision
• To make the other party angry and provoke bad decisions

All of these reasons are negative and undermine the win-win process of negotiation. Some negotiators do not care about abusing the other party because they think they will never have to deal with that party again. Unfortunately, as the saying goes, what goes around comes around. You just never know when you will meet with someone again, or with someone that person knows.

If you are subject to a personal attack, simply get up and leave the negotiating table. Personal attacks are abusive and unprofessional, and should not be tolerated.

It is good common sense, and a better negotiating tactic, to avoid personal attacks, both giving and receiving.

How have you dealt with a personal attack?

In the book Give and Take by Chester L. Karrass, there is a 61-question quiz for you to rate yourself as a negotiator. We’ve adapted this quiz to a ten-question format. The highest score is 100. The closer you are to 100 the better you are at negotiation.

How prepared are you when going to negotiation?
a) Very prepared
b) Somewhat prepared
c) I play it by ear

Do you believe what the other party says in a negotiation?
a) No, I am very skeptical
b) I believe some of what they say
c) I believe everything

How do you look at negotiation?
a) Mostly competitive but a good part cooperative
b) About half cooperative and half competitive
c) Highly competitive

Are you a good listener?
a) Very good
b) Average
c) Poor listener

Do you like to use experts in a negotiation?
a) Very much
b) Occasionally
c) Rarely

Do you think clearly under pressure?
a) Yes
b) About average
c) No

Do you get respect from others?
a) Yes, most of the time
b) Occasionally
c) Not usually

How important do you consider integrity in yourself and in others?
a) Highly important
b) Moderately important
c) Every person has to care for himself/herself

Are you sensitive to body language?
a) Yes, very sensitive
b) Moderately sensitive
c) What is body language?

Are you patient?
a) Yes, always
b) Average
c) I want to get to the bottom of things quickly

Scoring:
For every A answer, give yourself 10 points.
For every B answer, give yourself 5 points.
For every C answer, give yourself 0 points.

How did you score?

According to the latest Pew Research numbers, more than half (54%) of Americans believe that the United States is still in recession. (You can read more about the survey here: http://pewresearch.org/databank/dailynumber/?NumberID=1054 ).

The latest move by the Federal Reserve and the high unemployment numbers seem to back up this viewpoint.

Does the sluggish economy affect business negotiations? Some argue that it does. In a 2008 Harvard Business Review article “Negotiation Strategies for a Downturn,” Danny Ertel and Mark Gordon say that the downturn can affect both the quality and the quantity of deals. They write:

“During a downturn, things change. As the frenzied pace of a frothy market slows, there are fewer opportunities, and every deal matters. This tends to make sales and business development negotiators more desperate and anxious to close deals and hit their numbers. Those on the other side know this and take advantage of their new leverage. Negotiations become more difficult, and pressure on the deal makers to deliver increases. In a downturn, there will be fewer deals, so each must be done more carefully to ensure it actually delivers value.”

The authors caution that in a bad economy, negotiators can fall into bad deals, because parties cannot honor their commitments or over promise in desperation to get the deal done.

(Read the article here: http://www.businessweek.com/managing/content/apr2008/ca20080422_046639.htm )

Certainly the tough economy means negotiators are working harder to reach good deals. The era of excess is over for now. New deals probably don’t have a lot of added bonuses, but concentrate on the bottom line, and on value.

Dr. Chester L. Karrass advises that worth analysis is more important than cost analysis. In determining the value of something, you can assess the risk you are willing to take to get there. Value becomes more important when dollars are tight.

Have you found that the current economy has changed the way you negotiate? Please share your thoughts in the comments.

Each negotiator’s personality, skills, beliefs and role combine to form a negotiating style. There are various negotiating styles but there are three main types:

• Collaborative: Negotiating to achieve a win-win solution
• Competitive: Negotiating to achieve a win-lose solution
• Balanced: Negotiating somewhere in between collaborative and competitive

The type of negotiations a negotiator engages in also determines negotiating style. For instance, a diplomat generally has to be very careful while an industrial relations negotiator may be more confrontational.
(There’s a list of negotiating styles here: http://changingminds.org/disciplines/negotiation/styles/styles.ht _

Your negotiating style can affect the outcome of your negotiation. If you are in a client/customer centric business, you may need to modify your negotiation style to better match your clients. According to Stuart Sanders, writing in his blog New Directions for Agency Growth:

“Many times, great clients are lost due to blunders in negotiating. But there are negotiating tools and techniques that can help you land prize clients. Or keep key clients longer.”

Sanders goes on to say:

“One of the first steps in successful negotiations is assessing your client’s style or profile accurately, and responding to their negotiating style in the way best suited to them. There are four client profiles, based on how they work and respond, whether they are more task oriented or people oriented, and whether they are high or low assertive.”

Read the post here: http://sandersconsulting.com/newbusinesshawk/bid/49738/New-Business-Client-Service-Keys-to-Successful-Negotiation

Do you know what your negotiating style is? You can take a quick 10-question quiz from the Ediburgh Business School here: http://www.ebsglobal.net/programmes/negotiation-quiz

Have you found you have a set negotiation style or do you vary it based on the situation? Tell us your experiences in the comments.