Do You Need a Mediation?

Webster’s defines mediation as “intervention between conflicting parties to promote reconciliation, settlement or compromise.”

The U.S. Equal Employment Opportunity Commission (EEOC) defines mediation as "a fair and efficient process to help you resolve your ...disputes and reach an agreement. A neutral mediator assists you in reaching a voluntary, negotiated agreement." The emphasis, which the EEOC includes in their definition, is on fairness and efficiency. If you are interested in labor meditations, please read more about the EEOC and negotiation here.


By understanding those definitions, it seems that every business and diplomatic negotiation could use mediation. After all, what is negotiation if not the act of reaching an agreement?

However, not every negotiation requires a mediator. Many times, the parties are able to reach an agreement on their own. On the other hand, certain situations such as deadlock or when communications have been compromised by heightened emotion, benefit greatly from mediation and even require mediation to be able to conclude negotiations.

A mediator helps to diffuse conflict and to reach accord. He or she acts as a communications go-between.

Dr. Chester Karrass tell us that mediators bring the following to a negotiation:

• They suggest realistic expectations
• They listen to both sides without bias
• They help stimulate alternative thinking or different approaches to a resolution
• The may suggest a compromise that neither party considered
• They may give both parties an “out” or a way to save face

Choosing a mediator is probably just as hard as the situation that brought you to mediation. A good mediator must be impartial and must command respect. A good mediator also has the social skills to manage conflict, knowledge of business practices, and experience. Be wary of any mediators with conflicts of interest or who are overly biased.

Listen to me!

Norm Brodsky, an entrepreneur and business advice columnist, writes in the June 2009 issue of Inc. Magazine:

“(The) key rule of negotiating for me: Never anticipate what the other side is thinking. Go into every negotiating situation with an open mind and listen to what the other party is saying.”

Read the whole story of why Brodsky arrived at this conclusion.

There is no doubt that active listening during a business negotiation is crucial for your success. After all, if you don’t understand where the other party stands or why, you won’t know how to proceed or what is expected of you.

Sometimes we hear someone talking but we don’t listen to what they are saying. Our minds are not focused on what the other person is saying because we are too involved in our own thoughts. We are distracted or we ignore information we don’t like or disagree with.

Real, active listening is a skill that we can and should master. It takes a conscientious effort to do so. Dr. Chester Karrass gives us a few tips that can help improve our listening:

1) Provide the other party with your full attention. That means that you are not engaging in doing anything else—no fiddling with papers or looking at your text messages.
2) Don’t interrupt the person speaking. Let him or her finish his or her thoughts before you jump in.
3) Don’t tune out just because you don’t like what the person is saying.
4) Repeat back what you have heard.

Dr. Karrass also advises that you should have an “official listener” on your team who takes detailed notes recording what is said, how it is said and in what order.

Your negotiations will certainly improve if you work on your listening skills.

Were you ever in situation in which you faltered because you did not listen to the other side? Please share in the comments.

Negotiating Labor Strikes

Striking out

In Canada, the City of Toronto’s workers are on strike after a breakdown in labor negotiations with the city.

At issue are job security, benefits, and other union demands. The strike will stop garbage pick up in Toronto, as well as several other municipal services.

A strike to show unhappiness with labor negotiations is not unusual. In this case, a strike that affects a basic and necessary service such as garbage removal is bound to stir up discontent and discomfort, which in turn will create pressure on the City of Toronto to go back to the negotiating table. Many workers’ unions have used strikes as a pressure tactic to regain traction in labor negotiations that are deadlocked.

Are strikes a good negotiating tactic? While we are not advocating striking, we do know that strikes, as Dr. Chester Karrass says, are maneuvers that can impact the negotiation process. Karrass writes that strikes “affect the expectation of the parties and alter the balance of power.”

In his book, Give and Take: The Complete Guide to Negotiating Strategies and Tactics, Dr. Karrass goes on to say that strikes are a phase in negotiations. Negotiations may go on during or after a strike, but “the estimates of probable costs are sharpened by reality. The biggest difference is that both parties convey their resolve by accepting the real costs in preference to a deal that they don’t like. They test each other’s strength and resolve in the marketplace of suffering.”

In essence, strikes are designed to tip the balance of power and to create an environment that is more favorable to concessions.

We will see how long the garbage strike goes on in Toronto. By targeting this essential service, the strikers know that pressure will build quickly. It remains to be seen how many concessions Toronto will make in order to stop the strike.

Do you think that strikes are a good tactic? Please share thoughts in the comments.

Be More Persuasive

Perhaps one of the most valuable talents/skills that a negotiator should have is being persuasive. After all, if you can’t persuade other people to consider your side you won’t get very far.

Here are a few negotiation tips to increase your power of persuasion.

Focus on the other person’s positive attributes

Find an attribute you like about the other person and then compliment her/him on it. This tip comes from a Harvard Business blog:

Be sincere, genuine and likeable

This tip comes from Pat Price in Best Management Articles:

Ask questions rather than make statements

This tip comes from Calvin Sun in the Tech Republic:


Dr. Chester Karrass, in his book Give and Take, suggests the following:

• Start with easy to settle issues rather than the more charged ones
• Deliver good news before bad news
• Emphasize where you are in agreement
• Present both sides of the issue
• Pay attention to your end argument, since it is the one the other person will remember the most
• State your conclusions explicitly
• Repeat your message to create acceptance

What persuades you?

Negotiation News Round-Up

Boston Globe Negotiations

The negotiations are still going on over at The Boston Globe. Recently, we wrote about the highly-charged negotiations between the owner of the Globe, The New York Times, and the various unions at the Globe. Now, the Times and the Boston Newspaper Guild are negotiating on how to cut $10 million in costs. The unions had agreed to a 23% cut in salary to achieve those cuts. Read the AP report via Google here:

http://www.google.com/hostednews/ap/article/ALeqM5jkzBYoal_s1ms77Fzrfv3jMppZggD98SM6RG1

Purchasing.com: Suppliers do their homework

We know that good business negotiators always do their homework. This article, from Purchasing Magazine, discusses how suppliers prepare for a negotiation with purchasers. However, the article tells us, even though suppliers are well prepared, purchasers generally have the advantage since they have the budget.

Automaker Negotiations

We’ve seen both Chrysler and GM go under Chapter 11 bankruptcy protection and have seen that the negotiations there involved the United Autoworkers, among others. We have not heard much about Ford, since it is the one American car manufacturer that did not ask for a government bailout. However, Ford does have ongoing negotiations with unions. Ford CEO Alan Mullaly discussed how Ford is working on its profitability with Fox Business News, and said “Ford is committed to continuing to reduce debt and become profitable again in 2011. He said negotiations with the UAW are ongoing and that Ford will continue to work on improving “all elements” of its competitiveness.”


Negotiations with Iran?

Iran’s contested elections may pose a big challenge for U.S. negotiators. It is not clear that the declared winner really obtained a majority of the vote. There have been days of protests, and the United States has been waiting to see what the outcome is. Robert Kagan argued in a Washington Post op-ed that these protests are not good news for President Obama’s desire to negotiate with Iran, “but, rather, an unwelcome complication in his strategy of engaging and seeking rapprochement with the Iranian government on nuclear issues.”

At issue is the legitimacy of the Iranian government. In his book The Negotiating Game, Dr. Chester Karrass says that legitimacy is “a source and symbol of power.” He also says that buyers, sellers and governments build strength on “the basis of higher institutional or cultural authority.” In the case of Iran the legitimacy of the government is being challenged, setting the stage for negotiators questioning the power and authority of Iran’s re-elected president to negotiate with the United States.

Patience -- A Negotiation Virture

Earlier this week, we discussed keeping your cool. Getting emotional can derail a negotiation, and so can being impatient. In fact, Dr. Chester Karrass advocates using patience as a negotiation tactic.

Dr. Karrass believes patience is one of the MOST powerful negotiation tactics. Patience, in conjunction with persistence and determination, can help you win at a negotiation table.

During a negotiation, patience means being willing and able to bear the situation, and not being rushed into a decision because the other party is looking for a resolution. Patience is a long-term tactic because the expectation is that you will gain more by waiting than by seeking a quick end to the negotiation.

The reason patience is so powerful is that it gives you the gift of time.

What can additional time do for you?

• Help you to really understand the issues
• Allow you to explore the other side’s expectations
• Discover the risks
• Test your opponent’s determination
• Find new alternatives

Time also allows more information to be shared, and with this knowledge, you are in a better position to negotiate an outcome that may be more beneficial to both sides.

Patience is also a powerful tactic because it functions as a testament to your resolve. When the other party thinks you are resolute, you may obtain more concessions.

Perhaps Saint Augustine put it best when he said “patience is the companion of wisdom.”

Have you had a negotiation succeed because of your willingness to be patient? Please share your stories with us in the comments.

Tense Recession Negotiations

Recessions create pressures which translate into tensions at the negotiating table. Sales are harder to close and margins are evaporating. Procurement and supply chain managers are under tremendous demands to reduce costs. Internal negotiations face increased competition for reduced resources.

Today your negotiating skills are critical—they might have become your survival skills! You are going to have to work harder – and smarter – to negotiate successful agreements.

The key issue today is how to negotiate a Both-Win outcome where both you and the other party benefit.

Don’t underestimate your negotiating power. So often we fail to examine the limits on the other party’s power. In a recession there may be more limitations on the other party. Only start a negotiation with full understanding of your strengths and a full examination of the potential pressures on the other side.

Slow down!

The longer a negotiation takes, the more you discover about yourself and the other party. This is the framework for a better agreement. A quick deal generally is a dumb deal. Not always but often. And a quick deal may fail if it leaves out what may be the most important part of a negotiation, which is making a better deal for both parties.

The cure for tense negotiations is to quickly transition into a search for a Both-Win outcome. This helps dissolve the tension. As soon as the other party senses what you are doing, their comfort level with you will soar. Suppose a salesperson says to a buyer: “Let’s stop talking about whether the price should be $1.00 or .95 cents. Let’s talk instead about ways to make this deal better for both of us. Do you need financing? How about staging shipments or just-in-time deliveries? What if I change the design like this? Can this specification be modified; it could save both of us some costs. Are there any ways we can increase the size of the project? When a salesperson does this, the potential for mutual satisfaction soars.

Examine Total Cost

The total cost approach is a powerful negotiating tool for any negotiation that is focused on prices. Direct the negotiation towards total cost instead of price. The price of what is being sold is only one component in the total cost of ownership. The process of identifying all of the components that go into ‘Total Cost’ provides a fertile environment for relationships to build between the negotiators and for each side to uncover potential Both-Win opportunities that are not focused on the single issue of price.

Many salespeople will have a tendency to convince themselves that if only they had lower prices they could bring in more business. They will increasingly discount their company and product advantages because buyers will be telling them that those ‘value added’ aspects don’t mean a thing today. Sure prices are important, but often price is not the crucial aspect of a negotiation. There can be many reasons to win or lose business besides price. The buyer who returns to their organization with the best price and nothing else is not considered a winner. The successful buyer is one who looks at the full picture, from quality to delivery to product specifications to support services and yes price. A buyer who gets what they need on the other issues can give a little on price. Will they? That’s going to be determined by negotiating skills.

Concessions and Satisfaction

The recession is going to condition everyone to ask for more and more concessions. How you make concessions is critical to success in negotiations. Make sure you do leave yourself room to negotiate, to come down. Why? You want to leave the other party with a degree of satisfaction. They want to leave the negotiation feeling that they have won some concessions, so make certain you allow for that. And don’t make large concessions. Large concessions leave the other party wondering what else they can get out of you. The same goes for making concessions too quickly. So go slow and small. Whenever you make a concession, learn to ask for something in return.

In a successful negotiation, in the final analysis what you are doing is creating satisfaction for the other party. In fact, all the advice above relates to that. These are ways to create satisfaction. If you happen to be in sales, do this and, even if you don’t land this deal, you will get a chance to negotiate on the next deal. You will have established a relationship, and that’s really how you will succeed in business. Recession or not.

Emotions in Negotiations

Keeping your cool.

We’ve all seen it happen: someone loses their cool and then things go downhill very quickly. This is the last thing we want to see happen during a negotiation. Strong emotions during a business negotiation can lead to deadlock.

Getting emotional during a negotiation has an effect both on you and the other party. When you are emotional, you don’t think clearly. In fact, you distort reality and even lose touch with what is really going on.

Your emotional actions breed reactions from the other party. The other person might react quite negatively to your emotional outburst: he/she might become afraid that things are out of control or feel that that he/she pushed you too far.

Some negotiators use emotion to manipulate a negotiation. They feign anger or apathy to move the negotiation toward their goals precisely because they understand that emotions create reactions in the other party. Be wary of this type of manufactured emotion.

Of course, it is hard to escape our genuine emotions. A strong emotion can show what you really care about. However, in the interest of the negotiation, you must keep your cool.

Here is what to do when a negotiation turns emotional:
• Focus the discussion on facts, and not feelings.
• When things get too heated, call for a time-out (or a coffee break).
• Rephrase the other person’s comments to show active listening.
• Always work to maintain your composure.

And remember, a negotiation is a discussion not an argument. The person who shouts the loudest does not win!

What do you do to keep your cool?

Telephone Negotiations

Should you negotiate on the telephone?

A few weeks ago we discussed online negotiations, but a far more common not-in-person negotiation takes place on the telephone. How and when should you negotiate on the phone?

Let’s start with the when.

According to Dr. Chester Karrass, “a phone negotiation is the ultimate quick-deal maker.”

Here are some situations when the phone works best:

• You are dealing with a hard-to-reach person
• You want to say no easily
• You don’t want to seem concerned
• You want to sound tough or resolute
• You want to keep the discussion short
• You want to equalize your status
• You want to limit the amount of information
• You want to talk more, listen less
• You are prone to interrupting frequently
• And last but not least , you want to keep costs low (no flying a team across the country)

Let’s discuss how to negotiate effectively over the telephone.

The first rule is the rule for all negotiations: be thoroughly prepared, and be better prepared than the other party.

A few dos:

• Make a checklist to avoid omissions
• Take notes during the conversation
• Confirm agreements by repeating them back in your own words
• Have a ready excuse to break off the conversation
• Talk less to get the other party to talk more

A few don’ts:

• Don’t start a phone negotiation when you know you won’t
have time or you are in the middle of other things.
• Don’t multi-task during the phone call. Remain fully engaged
in what is being discussed during the call.
• Don’t start a conversation unless you know your issues
and you have a position on them
• Don’t be afraid to call back if there are errors in your calculations
or you decide you want to revisit an important issue.

Risks:

• When on the phone you can’t look the other person in the eye to determine
their emotional reactions to what you are saying. The message you think
you are sending might not be the message they are receiving.
• You may end your call thinking you have agreement when you really have no
agreement from the other side.
• If you use your cell phone you may not have the opportunity to write down
the results of your call until later. When you do document what happened on
the call, what you write down may be different from what was actually
agreed to.

Do you routinely engage in telephone negotiations? If so, when are they most effective for you?

Negotiations in the Spotlight: NFL vs. NFLPA

Soon, the National Football League (NFL) will be entering negotiations with the NFL Players Association (NFLPA). This will be a high-stakes negotiation, as football is the most popular and most profitable sport in the United States, making about $8 billion each year.

This will be the first negotiation between new NFLPA Executive Director DeMaurice Smith and NFL Commissioner Roger Goodell. Read an interview with Smith in the Seattle Times here:

http://blog.seattletimes.nwsource.com/seahawks/2009/06/08/the_business_en.html

Several items are on the table:

• Collective bargaining agreement expires in 2009 and negotiations on extending the agreement began on June 1.

• Players are seeking a larger portion of the league’s revenue streams.

• Players’ salary cap is due to be removed in 2010.

• NFLPA wants access to NFL financial accounting. Read full story on ESPN.com:

http://sports.espn.go.com/nfl/news/story?id=4181186

• Expanding the playing season (more games translates to more revenue).

The sour economy is playing a big role in this negotiation. Sponsorships have slowed and ticket sales are down. Players want to make more but team owners are claiming they are getting less revenue.

In a June 9 Forbes Magazine article, Tom Van Riper reports that these negotiations could escalate to a strike or lockout because each side is looking to establish its power. Read full article here:

http://www.forbes.com/2009/06/09/nfl-players-union-business-sports-football.html

In the article, Riper writes: “Goodell's biggest weapon for averting a strike: Convincing the players that it is the worst possible time for a stoppage given the recession. The last thing anyone wants is to antagonize an already stressed-out fan base by haggling over too many details.”

It seems that the recession could work in the NFL’s favor. It will be interesting to watch these negotiations unfold, and see how they affect other sports negotiations.

Recession Is Boon to Negotiating Skills

There has never been a better time to sharpen your negotiating skills. Many companies are feeling the recessionary economy’s pinch and are now more open to negotiating rates, fees and added value. Because of the recession, the power scales are being tipped in favor of the buyer.

Consumers who negotiate are getting better deals and saving money. Savvy shoppers are bargaining for deals on furniture and for other goods and services that were traditionally sold at face value. In fact, many shoppers are using the recession as leverage, knowing that stores are anxious for sales.

“Most everything, it seems, is open to negotiation these days as supply outstrips demand, emboldening price-conscious consumers to push for discounts and deals,” writes Susan Todd in the New Jersey Star-Ledger.

http://www.nj.com/news/index.ssf/2009/06/in_recession_more_consumers_pu.html

Price negotiations are also going on in the business-to-business sector. For instance, according to Crain’s Detroit Business, hotels are now more flexible on rates for meetings and conventions (read article here:

http://www.crainsdetroit.com/article/20090607/FREE/306079992/1068#

The Los Angeles Times is reporting that a growing vacancy rate in even upscale retail locations is “giving a bargaining edge to those tenants who've been able to hang on, and many have been negotiating cheaper leases. In some cases, landlords in the Los Angeles area have dropped rents between 20% and 40%, brokers said.” Read the full article here:

http://www.latimes.com/business/la-fi-retail-space6-2009jun06,0,826746.story

As with any negotiation, be prepared. Do your research, and know what price you are willing to pay before you start negotiating. Also, be sure to understand the willingness of the seller to negotiate.

For a more in-depth look at how to negotiate during a recession, refer to our earlier post: Strategies for Recession Negotiations.

Have you found that you are negotiating price more during the recession? Please share your experiences in the comments.

Thoughts and Quotes on Negotiation

People have been negotiating with each other for thousands of years, and ever since, they have been talking about how to do it best. We thought it would be interesting to take a look at how (famous) people have viewed negotiations:

From our founder’s perspective

Chester Karrass: “In business, you don't get what you deserve, you get what you negotiate.”

From a political perspective

Richard Nixon: “Let us move from the era of confrontation to the era of negotiation.”

Dean Acheson: “Negotiation in the classic diplomatic sense assumes parties more anxious to agree than to disagree.”

Howard Baker: “The most difficult thing in any negotiation, almost, is making sure that you strip it of the emotion and deal with the facts. And there was a considerable challenge to that here and understandably so.”

Francis Bacon: “If a man will begin with certainties, he shall end in doubts; but if he will be content to begin with doubts, he shall end in certainty.”

From a poets perspective

Robert Browning:That low man seeks a little thing to do,
Sees it and does it:
This high man, with a great thing to pursue,
Dies ere here knows it.

That low man goes on adding one to one,
His hundred soon hit;
This high man, aiming at a million,
Misses a unit.

Other perspectives

Harry Martinson: “The art of negotiation is perhaps what most deeply distinguishes man from the animals, and it is this art and this will to negotiate that has brought man forward, elevated him beyond the animals.”

Robert Estabrook: “He who has learned to disagree without being disagreeable has discovered the most valuable secret of a diplomat.”

If you have any interesting quotes on negotiation, please share with us in the comments. Or, create your own quote and publish it on this blog.

Strategic or Tactical Negotiation?

When you enter a business negotiation, chances are you have thought about what you want to achieve. Perhaps you have even planned for the negotiation. But are you being strategic or tactical?

Many people trip up on the difference between strategy and tactic, and the easiest way to explain it is that tactics are what allow you to achieve your strategy.

Dr. Chester Karrass talks about three types of planning:

1. Administrative planning: Focused on providing information to teams/individuals to ensure the outcome of both strategies and tactics.
2. Strategic planning: Focused on achieving your long-range goals
3. Tactical planning: Focused on getting the best results from a specific negotiation

In Dr. Karrass’ view, the most important type of negotiation planning involves strategy. Your strategy planning will be centered on information such as: product-market goals; worth analysis, price and cost analysis. Using a strategy planning session, you will formulate goals, from least to most important. With these goals in mind, you can envision where a specific negotiation fits and how it can help achieve those goals.

An example:
Strategic decision: After a worth analysis, the company decides to buy parts rather than manufacture them.
Administrative decision: Team will enter a business transaction with ABC parts supplier, based on the quality and reliability of their parts.
Tactical decision: To negotiate a price of no more than $X per part under a two-year exclusive contract.

Have you entered a negotiation without an understanding of your long-range goals? Did it affect the outcome? Please share your views in the comments.

Nuclear Arms Negotiations

Negotiations in the Spotlight: Cold War Arms Negotiations Continue

Nuclear arms negotiations are probably the most fraught and delicate negotiation scenarios because of the hugely destructive nature of nuclear weapons. During the Cold War, the two super powers stood in opposition over each country’s nuclear defense. In political speak, both countries were discussing a ‘MAD’ world—mutually assured destruction. Even though the Cold War has ended, we continue to see issues regarding nuclear weapons. Last week, we witnessed North Korea’s nuclear weapons tests, and its lack of interest in negotiating regarding its nuclear program.

At present, the United States and Russia are still engaged in arms negotiations. Today, negotiators from both sides will meet in Geneva to talk about the START treaty (the Strategic Arms Reduction Treaty originally negotiated with the USSR and proposed by President Ronald Reagan). The talks aim to renew the treaty before President Obama meets with Russian President Medvedev in July.

However, the negotiations are being hamstrung by differing goals. The U.S. is looking for progress on the 1991 treaty, which expires in December. American diplomats are also seeking to “reset” relations with Russia, which became very tense during the Bush Administration.

On the other side, the Russians want to discuss the planned U.S. anti-missile shield in Eastern Europe, which Russia views as a threat to its security and the U.S. sees as vital in protecting its interests against Iran. Also, the Russians may be seeking to increase their power. A Russian military analyst, Alexander Goltz is quoted in a report by the Agence France Presse (AFP)

http://www.google.com/hostednews/afp/article/ALeqM5gnzRC0HGzAbrR81ZiUOidvTEOReg

saying “The Russians are aiming to make the process last as long as possible, because the talks restore their status as a world power.”

Another crucial issue that is affecting the negotiation is that the U.S. wants Russia to provide help in containing Iran’s nuclear program.

We will know more about the result of these negotiations at the presidential summit in Moscow next month.