Negotiation = Entrepreneurship?

Do you have to be a negotiator to be an entrepreneur or do you have to be an entrepreneur to be a negotiator?

There is synergy between these two roles. Merriam-Webster defines an entrepreneur as “one who organizes, manages, and assumes the risks of a business or enterprise.” According to Dr. Chester Karrass, good negotiators have a high need for achievement.

To achieve, it could be argued, you have to be ready to take risks. The overlap between an entrepreneur and a negotiator comes down to assuming risk. So, people who do best in negotiations are hungry for success, and are willing to take a risk to reach that success. Ditto for entrepreneurs.

It is not really surprising that good negotiators are entrepreneurial, because what they are doing is putting themselves out there in a bid to succeed. So, you don’t have to an entrepreneur to be a negotiator, but you must be entrepreneurial.

According to Lyve Alexis Pleshette, writing in the PowerHomeBizcom website:

http://www.powerhomebiz.com/vol69/entreskills.htm

there are five skills every entrepreneur needs:

1. Sales and marketing skills
2. Financial knowledge
3. Ability to self-motivate
4. Time management skills
5. Administration skills

To those very necessary skills, we would add negotiation skills. Entrepreneurs will not succeed in getting their businesses off the ground if they don’t negotiate for what they want.

Conversely, perhaps learning the skills of negotiation also increases your entrepreneurial spirit. As you become a more confident negotiator, you will also become more able to identify what you want and how to get it.

Your thoughts?

Sonia Sotomayor Saves Baseball Negotiations

Easing negotiations: How Judge Sonia Sotomayor’s ruling “saved” baseball

As Judge Sonia Sotomayor goes through confirmation hearings for retiring Justice David Souter’s spot on the United States Supreme Court, we will no doubt be hearing a lot about her opinions and rulings. One that is particularly interesting is Sotomayor’s injunction in 1995 that ended that year’s Major League Baseball players strike. The ruling had everything to do with negotiations.

During the 1995 strike, players were at odds with baseball team owners about salary caps. When the owners took back salary caps, they then abolished salary arbitrations and forced player negotiations to go through the baseball commissioner’s office. The players cited unfair labor practices in a court case that went to Judge Sotomayor, who, among other things, had to determine whether baseball owners were undermining collective bargaining and engaging in unfair labor practices.

Baseball players and owners were at a stalemate, and tension and anger had all but stopped any negotiations on salaries. Judge Sotomayor’s ruling restored the terms of the previous agreement between owners and players, and it was done before the baseball season’s opening day, effectively allowing the season to go on as normal.

In the end, Sotomayor’s ruling resulted in putting the negotiators from both sides back on track. As Donald Fehr, executive director of the Major League Baseball Players Association says in a May 26 New York Times article: “Her ruling did not produce an agreement, but it gave the parties time to get on with normal business and get back to the bargaining table and produce an agreement.” (Read the full article from the New York Times here:

http://www.nytimes.com/2009/05/27/sports/baseball/27sandomir.html

The same New York Times article quotes Daniel Silverman, then the regional director of the National Labor Relations Board New York office as saying that “Sotomayor shrewdly understood that although labor law permitted each side in a negotiation to choose its representative, the competition among clubs for players’ services would have been diminished if all deals were negotiated by the commissioner’s office.”

Sotomayor leveled the negotiation “playing field” by putting owners and players back at square one, and allowing them to start negotiating from there and not from what was perceived as an unfair salary situation.

North Korea Negotiations

What if diplomatic negotiations don’t work?

Over the weekend, North Korea engaged in a nuclear test that brought both concern and swift condemnation from the international community. President Obama vowed to “stand up to this behavior,” which many believe proves that North Korea is on the brink of becoming a nuclear power.

Has the United States reached a point with the North Korean government in which diplomatic negotiations are no longer feasible? Bloomberg News reports that: “In the wake of the new tests, some argue that the U.S. and its allies must go beyond diplomacy to influence the North Koreans.” Some are calling for stronger international pressure. Others are arguing in favor of pressuring governments and businesses that are engaged with North Korea. Read the full article here:

http://www.bloomberg.com/apps/news?pid=20601087&sid=ad2G26D3X61s&refer=home

Although we can’t speculate on what will happen with this delicate political and diplomatic situation, we wonder whether you can or should negotiate with a party who does not seem to want to negotiate with you. Clearly, if a party refuses to come to the table, a negotiation is stalled before it even began.

However, is it perhaps not that the North Koreans don’t want to negotiate, but rather that there is such a wide cultural rift that both North Korean and United States negotiators are simply not understanding each other? Or maybe the North Koreans subscribe to the idea of winning through intimidation?

Dr. Chester Karrass is not convinced that intimidation is an effective negotiation tactic, but that does not stop an opponent from engaging in these types of threatening behaviors. Dr. Karrass, in his book In Business As In Life---You Don’t Get What You Deserve, You Get What You Negotiate, identifies eight types of intimidation tactics:

1) Legal intimidation
2) Intimidation by experts
3) Intimidation by raising the stakes
4) Threats
5) Status intimidators
6) Intimidation by taking hostages
7) Physical and environmental intimidators
8) Emotional, nuisance and embarrassment intimidators

It could be construed that by conducting this nuclear test, North Korea is attempting to raise the stakes and perhaps threaten the international community. Dr. Karrass believes that there are ways to deal with intimidation tactics, namely by offsetting each tactic with actions of your own.

In this case, the stakes are so high that the United States must find a way to engage with North Korea. What would be your advice to U.S. negotiators?

Fatique Impacts Negotiation Ability

We all know how it feels to operate on minimum sleep: not good. Our reactions are slower and our thinking is impaired. So it stands to reason that negotiating when you are tired is not a good idea.

Negotiating requires both physical and mental stamina. Fatigued people just don’t have the same alertness and responsiveness as if they were rested. If you are tired and your opponent is not, that increases his or her negotiating power. When you are tired you tend to make mistakes, deal with stress poorly and most importantly, exhibit faulty judgment (and as you know good judgment is one of the keys to a successful negotiation).

Sometimes fatigue results from too many late night sessions preparing for a negotiation. Sometimes, you had to take a red-eye flight to arrive at your destination. And sometimes the negotiation itself goes on too long and all parties become tired (and perhaps irritable).

Dealing with fatigue is one of the many helpful strategies Dr. Chester L. Karrass provides in his book Give and Take: The Complete Guide to Negotiating Strategies and Tactics. Dr. Karrass advises team leaders to conduct business at regular hours, and see to it that the team eats at normal times and gets enough rest.

Knowing that fatigue takes a toll, any negotiator should rest up before participating in any type of business transaction. Long weekends provide a great way to rest, recharge and re-energize.

Negotiations in the Spotlight: GM - UAW

If you have ever thought that there is little public interest in business negotiations, then you have not been following the recent news regarding negotiations between troubled automakers Chrysler and General Motors (GM) and their unions. These high-stakes negotiations have received lots of publicity precisely because they are determining the future of the auto industry in the United States.

We know how Chrysler’s negotiations turned out, and the car maker is headed for a partnership with Fiat.

This week, GM announced that it is terminating franchising agreements with hundreds of GM dealers nationwide. But that is only part of the GM restructuring push. GM is also negotiating with the United Auto Workers (UAW). The automaker faces a June 1 deadline to complete its restructuring, or it will face bankruptcy.

The issues that are creating most heat between GM and the UAW are:

• UAW opposes GM’s plan to import vehicles
• UAW opposes GM’s proposed plans to shut down 16 U.S. factories

The Associated Press (AP) reports that “Industry analysts say GM needs to import small cars from countries with lower labor costs to remain competitive.” Meanwhile, the UAW is worried about the loss of 21,000 jobs in the United Sates. (Read AP report here:

http://www.google.com/hostednews/ap/article/ALeqM5ipWue5E-KwNeeucTEHBCCFsyzvUQD988QBQ80

The UAW has increased its pressure on GM by lobbying Congress. The negotiations are also complicated by the many parties involved, including the US government, GM’s management, bondholders and secured lenders, dealers, part suppliers and other parties. (Read the Detroit Free Press report here:

http://www.freep.com/article/20090519/BUSINESS01/905190324/1285

According to the AP report, there is an incentive for the UAW to reach an agreement, because if GM goes into bankruptcy, judges in the case have the power to reverse or dismiss contracts.

It will be interesting to see where these negotiations end up.

Do you think that Chrysler negotiations have created a precedent for GM to follow?

Cultural Bias in Negotiation

Willingness to take risk varies widely by culture. Where one culture may find it perfectly acceptable to ask for much more than they need (i.e. they leave a lot of room to negotiate), another culture reacts to this approach negatively (i.e. they are lying to us, we do not trust them). Some cultures are very individualistic, while other cultures are collective or group oriented. Some cultures prefer a direct negotiating style while others prefer an indirect approach (i.e. via intermediaries or third parties). In some cultures decisions are made by consensus so no single person has to take responsibility. A particular cultural approach may be defined by geography, nationality, or company. Cultures vary from organization to organization. It is important to know who you are dealing with and how they prefer to negotiate.

International Negotiations

Western negotiators (i.e. from Europe or North America) generally prefer an organized, point-by-point, issue-by-issue approach to their negotiations. Some Asian cultures (particularly China) take a more holistic approach to negotiation; often jumping from one issue to another totally unrelated issue; then back to change a point that everyone had already agreed to; and then off to another issue. This disorderly approach can confuse an uninformed Western style negotiator. It hinders their ability to keep track of where they are in the negotiation and often is perceived as simply a tactic to gain an advantage. In fact, this seemingly disorderly approach is generally purely culturally based.

Cultural Bias

Understand the influence 'Culture' has on your negotiations. It does not matter if you are negotiating with a co-worker inside your own organization, a supplier, or a customer. Start by having a good understanding of your own cultural bias and how your negotiating approach may differ from that of the other party. Once you learn the cultural differences, don't just adapt yourself to the other party's culture. Learn ways to make the most of these cultural differences to craft more creative agreements. A good understanding of various cultural approaches to negotiating is to your advantage.

Let's Get Personal

Good negotiators have more than good business judgment. Being successful as a negotiator goes beyond knowing what you want and how much you are willing to pay for it. In fact, it may be that successful negotiators have a good negotiating personality.

The reality is you negotiate with people and certain personal traits always come into play. For instance, last week we discussed credibility in negotiations. Credibility is a tremendously important attribute in a negotiator. However, there are several other personal traits that help a negotiator achieve better results.

Some of the traits of a good negotiator are:

• Ability to inspire confidence
• Tolerance for conflict
• Patience
• Open-mindedness
• Self-confidence
• Integrity
• Stamina
• Persistence
• Tact
• Flexibility
• Sense of humor

Obviously, not every person has every trait. And as you can see, these traits are not about education or experience. They are about character and personality. It’s no coincidence that these traits are also the hallmarks of a pleasant personality. Working on developing these traits will not only make you a more agreeable person, but will make you a better negotiator.

Roxana Saberi - Concession or Justice?

You have probably heard of the American journalist Roxana Saberi, who was imprisoned in January by Iran on charges of spying. Saberi protested her innocence, and even embarked on a hunger strike. She was released this week.

Saberi became a touch-point in diplomatic negotiations between the United States and Iran. The New York Times reports that: “The Iranian government, some analysts said, sought to use the arrest of a journalist to gain leverage in talks with the United States over its nuclear program and other matters.” Read the full article here: http://www.nytimes.com/2009/05/12/world/middleeast/12iran.html

There are several theories about why Saberi was released.

On Foreign Policy’s blog Shadow Government (http://shadow.foreignpolicy.com/posts/2009/05/12/how_to_understand_the_case_of_roxana_saberi), the author Michael Singh theorizes that Saberi’s release was a negotiation tactic by the Iranians, in order to appear as if they have made a concession.

This is interesting because it goes to the role of perception in negotiations, especially in diplomatic negotiations. If we think the other party is making a fair concession, are we also likely to make a concession? In this case, what concession is Iran looking for from the United States? Is this merely a power play?

Diplomatic negotiations with an authoritarian regime like Iran’s tend to be largely based on assumptions. Dr. Chester Karrass says in his book Give and Take: The Complete Guide to Negotiating Strategies and Tactics:

“The reality of negotiation is that we must and should make assumptions about our opponents. We must assess as best we can what they can or will do, what risks they are willing to take, and what decision criteria are most important...The important thing to remember is that your assumptions are just that. They are no better than poorly educated guesses, at best.”

In this case, the United States faces hurdles in verifying assumptions, because we depend on the Iranians to give us information and access. We may never know what the Iranians intended with Saberi’s arrest or release.

Is Saberi being used as a pawn in US-Iran negotiations? Please share your thoughts in the comments.

Best Business Resources on the Web

With millions of websites and blogs at our fingertips, we at Karrass decided to find some of the most useful business sites to share with our readers. The following is a list of websites and blogs that we think provide some great business information and resources. We know there are plenty more out there.

Which website or blog (other than Negotiation Space of course) do you rely on for great business tips? Please share in the comments.

Company Information
(Note that there may be a fee to obtain detailed information)

Hoovers: http://hoovers.com/free/

Manta: www.manta.com/


Business and Management Information

All Business: http://www.allbusiness.com/
BNet: http://www.bnet.com/

Business Pundit : http://www.businesspundit.com/

Business Week Magazine: http://www.businessweek.com/

Fast Company: http://www.fastcompany.com//

Women on Business: http://www.womenonbusiness.com/

Leadership
The Intelligent Leader from the Washington Post:
http://voices.washingtonpost.com/leadership/

Small Business/ Business Advice

Inc. Magazine: http://www.inc.com/

Small Business Trends blog: http://smallbiztrends.com/

Stocks and Finance
Motley Fool: http://www.fool.com/

CBS Marketwatch: http://www.marketwatch.com/

The Sticking Point

What happens when you can’t get the other party to budge? You have reached the dreaded sticking point. In effect, sticking points are "no." Negotiators don’t like reaching "no" because it stops movement, and can derail the negotiation. Sticking points can suck the energy out of a negotiation and prolong the discussions because neither party is willing to concede on that issue.

Sticking points revolve around many issues: compensation, contract length, benefits, organizational structure, and so on. For instance, during the recent Boston Globe negotiations, a sticking point for the unions was retaining lifetime job guarantees.

Another current example involves Chrysler. Sergio Marchionne, CEO of Fiat, will now run Chrysler. He wants to combine Fiat, Chrysler and GM’s European operations. According to this Detroit News article:

(http://www.detnews.com/article/20090507/AUTO01/905070438/1409/Marchionne-to-head-Chrysler)

"Sources familiar with the negotiations, say Marchionne also wants to include GM's Latin American operations in the mix.

That is a sticking point in the negotiations -- along with the size of the stake that GM would get in the new company grouping Fiat's auto business, its prospective interest in Chrysler and the GM assets. Marchionne is proposing that GM should have around 10 percent, while GM is bound to want more, the source said."

How do you move past a sticking point?

Dr. Karrass calls these points of no agreement "sticky issues." He recommends that when you reach a sticky issue you should shift to another issue. Shifting allows the momentum to continue in the negotiation. With the momentum going, and having agreement on other issues, you will have more reasons to settle a negotiation.

How have you resolved a particular sticking point? Share your "war" stories in the comments.

Build Your Credibility

Negotiation tactics: Build your credibility

One of the most important items you bring to the table during a negotiation is your credibility. After all, if the other party doesn’t believe or trust you because you aren’t credible, then it is likely the negotiation won’t go very well at all. We always prefer dealing with people we believe or whom we trust. Your credibility backs you up.

In a negotiation, credibility is key. In the bestselling book, In Business As In Life – You Don’t Get What You Deserve, You Get What You Negotiate, Dr. Chester L. Karrass writes that "It makes good sense to bring to the attention of one’s opponent the past experience, accomplishments and special qualifications of team members." Why? Because expertise in your field automatically adds credibility to your position. Other qualifiers such as your title and educational achievement boost your perceived credibility.

Thus, to increase your credibility, you should strive to be as knowledgeable as possible about your products or services, and any issues that may affect them.

Truthfulness is also a factor in a negotiation. Your arguments could require substantiation. In order to build credibility, it is a good policy to provide facts and figures that can be checked. If something is not provable, or the numbers don’t add up, you open up a gap in your credibility.

You control your perceived credibility: By appearing professional and by providing reliable information, you can make sure others see you as credible. The more credible you are, the stronger your negotiating position will be.

Boston Globe Negotiations - Will They Shut Down?

Will the Boston Globe close because of failed negotiations?

Over the weekend, a deadline came and went and no agreement was reached in a month-long negotiation to decide the future of the Boston Globe. The New York Times (owner of the Boston Globe) is seeking concessions worth $20 million from the Boston Globe’s unions. The Times is threatening to close down the Globe, which has been in publication for 137 years, and is planning to file a 60-day shutdown notice on Monday. Negotiations may still be conducted during the notice period. The story from the AP is here:

http://news.yahoo.com/s/ap/20090504/ap_on_re_us/us_boston_globe_future

But why haven’t these high-stakes negotiations worked?

Power imbalance
This is a bad time for newspapers as they have been hit hard by declining ad revenues, readership losses, and increasing production costs. The Boston Globe has been especially affected, losing $50 million in 2008 and projected to lose even more this year. Clearly, the Globe is in a weak position in relation to the New York Times, which controls the purse strings. (Read the New York Times story here:

http://www.nytimes.com/2009/05/04/business/media/04paper.html?_r=1&hp)

Perceived hostility
The Boston Newspaper Guild said in a statement: “This tactic, while expected, is representative of the bullying manner in which the Times Company has conducted itself during these negotiations. Despite the Company's hostile tactics, we continue to negotiate in good faith and work diligently toward an acceptable outcome." In other words, one party senses hostility from the other, creating bad will between them. (Read the Boston Globe story here:

http://www.boston.com/business/articles/2009/05/04/agree_or_else_globe_tells_unions/)

Too many players
The Boston Globe has several unions (mailer’s union, Boston Newspaper Guild, delivery drivers union, Boston Newspaper Printing Pressmen's Union) representing different interests who may be prepared to make different types of concessions.

A large sticking point
Apparently, the sticking point with unions is that the Times seeks to eliminate lifetime job guarantees.


Do you think the Boston Globe will survive?