Are you a Skeptic?

Webster’s defines skepticism as “an attitude of doubt or a disposition toward incredulity in general or toward a particular object.” Skeptics like to consider, to question and not to accept things at face value.

Good negotiators should be skeptics. Why? Because negotiators need to fully evaluate what they are being told by their opposing party in order to make good decisions.

Dr. Chester L. Karrass instructs negotiators to approach evaluating the other party’s statements with these four principles:

Never take anything for granted.
Check everything.
Put everything in its proper context.
Distinguish between facts and the interpretation of facts.

The other party will present the information that bolsters their position and will leave out anything that is not favorable. As a negotiator, you must be aware of this. Figure out what information you need that may not be presented, and then ask for it. Facts, numbers, statistics can also be challenged.

In other words, question everything, including your perceptions and interpretations. A French proverb puts it rather succinctly: “Skeptics are never deceived.”

Stalled Negotiation?

Are you stalled?

Just as when your car stalls out, when a negotiation stalls you are delayed or can’t reach your final destination. In effect, stalling is sometimes used as a way to avoid reaching a deal. It is the opposite of a productive business negotiation. Some parties enter a negotiation with the intent of not reaching an agreement. Why?


Parties engage in deliberate stalling for various reasons or to achieve certain objectives that the other party is not privy to. According to Dr. Chester L. Karrass, there are several reasons that may be behind a stalled negotiation. These include:

To divert attention (similar to the smokescreen)
To tie up production or inventory
To search for information
To delay decision-making
To search for outside alternatives
To obtain more time
To cover up ulterior motives

Sometime negotiations stall for other reasons, including deadlock. We’ve discussed before how to avoid deadlock or work around it. However, when the other party enters a negotiation with the express intent of not reaching an agreement, there is no amount of negotiation skill or tactic that will jumpstart the discussions.

Have you ever been in a stalled negotiation? How did you handle it?

Smokescreens - Negotiation

Where there’s smoke....

Have you ever been in the middle of a business negotiation and suddenly the conversation shifts? Before you know you it you are discussing the latest vacation spot in the Caribbean and you are nowhere near resolving the pressing issue of delivery of your order. What happened? The other party just threw up a smokescreen.

Smokescreens are the other person's method for delaying a decision, changing the subject or clouding an issue. Perhaps it’s a ploy to get more time or to save face.

Last week we talked about icebergs and how they can derail a negotiation if you aren’t aware of what they are. Don’t get derailed by smoke either. Learn to recognize the smokescreen. To help you out, here is a list of typical smokescreens, taken from Dr. Chester L. Karrass’ book Give and Take.

Detailed explorations of unimportant processes or procedures.
Family talk (or talk about other personal/home/vacation topics).
Sudden bathroom breaks.
Sudden hunger.
Changing specifications.
Surprise alternatives.
Out loud reading of complicated or long or irrelevant regulations.
Permitting telephone interruptions.
Encouraging irrelevant cross talk.
Providing answers to questions not on the table.

Do you recognize these? Have you been smoked before? How have you cleared the air?

Iceberg Concept of Negotiating

We all know the power of the iceberg—after all it was an iceberg that brought down the fabled Titanic. An iceberg is so powerful because it only seems small on the surface, but underneath and hidden from view is a tremendous mass.

In business negotiations, we usually know right off the top (pun intended) what we are looking at. The other person or group generally needs money, goods and/or services. Those are the issues we are trying to resolve in the negotiation. But what the iceberg theory contends is that the hidden and unspoken issues under the surface can derail a negotiation. Both parties have hidden issues, and you will have more power in a negotiation if you can uncover, and fulfill, some of them.

According to Dr. Chester L. Karrass, writing in “In Business as in Life—You Don’t Get What You Deserve, You Get What You Negotiate,” you should be aware of several hidden issues or wants. These include:

Want to be liked
Want to be perceived as component
Want to be listened
Want to keep their jobs
Want to be treated with dignity
Want tangible recognition
Want to avoid trouble
Want to minimize risk
Want to keep what they already have

These wants are common to most people, but they are not easily fulfilled with material goods. If you do recognize these unspoken needs, you can work to satisfy them.

Have you ever been derailed by an iceberg? Share your story in the comments.

Problem Solving = Negotiating

What is a negotiation if not a discussion to find a solution to a problem? Your problem may be contractual (you need to reach an agreement to sell your house at a certain price) or you may have a purchasing situation (you need to buy a 1000 widgets and have them delivered tomorrow). In any case, you negotiate with the other party so that you both arrive to a satisfactory resolution.

Dr. Chester L. Karrass writes the following in The Negotiating Game:

In every negotiation it is possible for both parties to help each other at no expense to themselves. If each understands the problems of the other and openly tries to solve these problems, both can benefit. In negotiation we call this the problem-solving process.” (p. 129)

Dr. Karrass goes on to say:

“Opportunities to solve mutual problems between a buyer and a seller exist in every contracting situation.”

How do you problem-solve?

Before you start problem-solving, you must have the willingness and motivation to reach a mutually agreeable solution. You will have to be cooperate with the other party and believe that both can benefit from resolving the situation at hand.

Once you have agreed to work together:
1) Define the problem to understand the situation and parameters
2) Brainstorm a list of viable options
3) Do a cost-benefit analysis of options
4) Choose the option that best solves the problem for both parties

To succeed in problem-solving is to succeed at negotiating.

Non-Negotiable Positions

If you are involved in negotiations you will, sooner or later, encounter a “non-negotiable” position. This is an inevitable part of negotiating. You might have to lay out your non-negotiable position to someone, or you could receive a non-negotiable position from someone else.

When someone encounters a non-negotiable stand, the common reaction is to get angry and lash back.

Are non-negotiable positions negotiable? Do they serve a purpose at the bargaining table? The answer to both questions is yes.

Non-negotiable positions are appropriate under some circumstances. They serve to lower the expectations of the other party. They can also help make the other party more willing to compromise rather than risk a serious confrontation. However, you should not make something non-negotiable unless you have considered the cost of deadlock; the degree of mutual dependence between the parties; potential backlash; face-saving needs; and your ability to support and defend your position.

Sometimes non-negotiable positions are so extreme that compromise appears virtually impossible. At stake may be deep-rooted values or policies that are of an ethical, religious, professional, or economic nature. The introduction of such a position may create hostility. A non-negotiable position is dangerous for the party making it. It can so inflame the other party that deadlock becomes inevitable on all the other issues being negotiated.

Is there room for taking a non-negotiable position in your negotiations? Of course there is. It happens every day.

“We cannot reveal our costs.”
“We will not show you your competitor’s proposal.”
“We will not give you our design secrets.”
“We cannot reduce the price because government regulations prohibit us from doing so.”
“We will not permit your people to interfere with our management decisions.”

These positions may or may not be non-negotiable, but they sure sound like it to the inexperienced negotiator. You need to test positions like these.

The following countermeasures will help you keep emotions under control even when deeply held values are threatened:

1. Move to “off-the-record” discussions to diffuse the hostility and gain a better understanding of the other party’s position.
2. Explain why the demands are non-negotiable. Sometimes the best concession you can give is simply a good explanation.
3. Be prepared to discuss the issues that are negotiable. Agreement here may soften the non-negotiable positions.
4. Don’t panic—remember all of the negotiating tools you have at your disposal from the Karrass seminar.
5. Don’t be afraid to use your negotiating strength—with discretion.

Approach something that appears to be non-negotiable with a cool head, complete information, and a through understanding of the organizational and personal issues surrounding the position. When challenging a non-negotiable position, provide sufficient time for acceptance of your arguments. This will help soften the non-negotiable position. Karrass research indicates that most non-negotiable positions turn out to be somewhat negotiable.

Negotiations in the Spotlight-BART vs ATU

A looming deadline and increased public pressure forced an eleventh-hour resolution to intense negotiations between the Bay Area Rapid Transit (BART) ( http://www.bart.gov/ ) and the Amalgamated Transit Union Local 1555 (ATU), its largest worker’s union. Reaching the tentative agreement averted a strike, which would have stilled the San Francisco area’s mass transit and stranded thousands of commuters.

BART is projecting a $310 million deficit over the next four years due to a decline in ridership, state transit funding and sales tax revenue. The BART Board of Directors had set a target of cutting $100 million in labor costs. The BART management wanted $38 million in savings from the ATU.

Last week, the ATU announced that it would strike. Final negotiations between BART and the ATU started on Saturday, and went through to Sunday night. According to the Daily Californian: “Much of the controversy surrounding a contract that union members rejected on Aug. 10 was focused on cost savings that ATU officials said disproportionately affected their union members.” (Read more here:



http://www.dailycal.org/article/106274/bart_strike_averted_following_last-minute_negotiat

The intense negotiations resulted in a tentative agreement, which still needs to be ratified by the ATU’s membership. Details of the agreement have not yet been released, but the San Francisco Chronicle reports that BART management was looking for “a wage freeze, the elimination of 49 of the system's more than 200 station agents through attrition, a cap on health benefits for all BART employees, and changes to work rules to promote efficiency.” (Read more here:



http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/08/16/MN77199F58.DTL&tsp=1

If a deal had not been reached, both BART and the ATU would have faced many angry mass transit users. This may have led to more financial losses. It was necessary for both sides to reach an agreement.

Are you a bully?

We are all familiar with bullies. We were probably harassed by a bully at least once during our school years. Some kids grow out of bullying when they leave school. Others go on to be adult bullies. In fact, many people deal with bullies at work. So much so there is even a group called the Workplace Bullying Institute.

Webster’s defines bullying simply: to treat abusively. Bullies use abuse to intimidate others and to try to get their way. According to the article “Dealing with Difficult People: The Workplace Bully” by Susan David, in the workplace, bullies engage in tactics such as falsely accusing others of errors, being intimidating, and being harshly and unfairly critical. Read the article here:

http://www.allbusiness.com/society-social-assistance-lifestyle/religion-spirituality/12361401-1.html

Some negotiators who are bullies feel that abusing their opposition will make them prevail in the negotiation. In negotiations, bullies are dismissive, they criticize constantly and they may engage in non-verbal intimidation like staring down. Bullies try to create unpleasant conditions in order to lower the opposition’s resistance.

But here’s the thing: no one likes to be abused. And it’s a universal business truth that people like to do business with people they like. Being likeable is a huge factor in getting ahead in any aspect of life. Logically, the obverse is also true. Being unlikable will set you back and no one is more unlikable than a bully.

In the end, a bully will not get his or her way in a negotiation because the opposing party will not want to continue talking. A bully can never be a good negotiator because a successful negotiation usually results in a Both-Win situation for all involved. A bully is always looking out for his or her own success, often at the expense of others.

Have you dealt with a bully in negotiation? Have you been a bully in negotiation? Please share your experiences in the comments.

Simon Cowell's Salary Negotiation

We came across this article by Paige Albiniak in Broadcasting & Cable magazine

http://www.broadcastingcable.com/blog/Fates_Fortunes/20841-Simon_Cowell_s_lessons_in_salary_negotiation.php

about how American Idol judge Simon Cowell negotiated a contract worth $45 million per year over three years.

Negotiation skills are an important part of salary negotiations. In Cowell’s case, he came to the negotiating table with power. He is an important part of a very popular show, which brings in viewers and dollars to the Fox network.

Simon Cowell got what he wanted because he was able to convince his employers that he was worth what he was asking. As Albiniak writes: “(Cowell) knows a few incredibly important things: he knows his own worth, he knows the worth of the show and he knows how much he personally contributes to that worth.”

In essence, what Cowell brought to the table were two indispensable items in negotiation: confidence and knowledge.

Any negotiator must be confident in his or her position. Lack of confidence will be seen as a weakness, which can be exploited by the other party.

It has been said many times that knowledge is power, and nowhere is this more relevant than at the negotiating table. Specifically, in salary negotiations, knowing what other people make in your field or in your region will give you a solid base to make your argument.

Author Albiniak recommends checking salary ranges for your job title at websites such as salary.com and payscale.com. On salary.com, it is recommended that anyone negotiating a job should reach five agreements:

1. Agree on a benchmark job.

2. Agree on your proficiency and performance level.

3. Agree on the market value of the job.

4. Agree on where your salary should fall.

5. Agree on what performance is necessary for future salary increases.

Read more here:

http://www.salary.com/personal/layoutscripts/psnl_articles.asp?tab=psn&cat=cat011&ser=ser031&part=par172

Do you have any tips on how to succeed at salary negotiations? Please share in the comments.

Questions

As you know, successful business negotiations require a good amount of listening and learning. There is no better way to listen and learn than to ask good questions of the other party. We’ve compiled a list of all purpose questions that you can use the next time you need to learn a bit more about the other party's position.

Directive questions—These specific questions work best when a buyer seems uninterested or apathetic.

What price have you been paying?
What price must I meet?
Have you seen the report on our product?
What specifically makes you unhappy with the product?

Non-directive questions—General questions to gather broad answers, giving the other person a chance to express him or herself:

How do you usually determine the price?
Please explain the manufacturing process.
What do you look for in a good warranty?
How do you feel about our company?

Questions that get specific information:

Will you show me how you got to that figure?
What objections do you have to our product?
Will you explain that to me?

Questions to stimulate thought:
Would you consider a this deal (specify something like two-year contract, etc.)
What if we ordered twice as many?

Questions to cause decisions to be made:
Did you know we are increasing the price next week?
Are you ready to order now for a 10% percent reduction in the price?
Are you interested in the product? Why not?

These and many other kinds of questions are discussed in Chester L. Karrass’ book: Give and Take.

What questions work best for you?

Proof -- Persistence Works

Yesterday morning, American journalists Euna Lee and Laura Ling arrived back in the United States after being detained in North Korea since March. It was a joyous occasion that came about thanks to a mission by former President Bill Clinton and also to months of “back channel” negotiations between the United States and North Korea.

At first, it seemed that Clinton had gone to North Korea to negotiate for the release of the journalists. The media later reported that Clinton was recruited to fulfill the North Korean leader Kim Jong-Il’s request for a very high level American representative. In fact, the negotiations had already been concluded and Clinton’s trip was the final demand from North Korea.

In the past few months, North Korea has been testing the United States. They have been testing missiles, threatening to attack Hawaii and had sentenced Lee and Ling to 12 years of hard labor, which was seen as a harsh punishment for a minor offense. Kim Jong-Il had been rumored to be sick and there has been talk of regime change.

From the moment the journalists were detained in March, through Bill Clinton’s arrival in North Korea, secret negotiations were being held with the North Koreans, with the assistance of the Swedish government. The United States relied on third parties to be able to communicate with the North Koreans, and found a way to reach a win-win, face-saving scenario for both countries.

For the North Koreans, Bill Clinton’s presence fulfilled Kim Il-Jung’s desire for the appearance of a high-level American official (he had rejected former Vice President Al Gore) and also gave him the sense of being taken seriously. The release of the journalists was deliberately not linked to any other issue the U.S. may have wanted to discuss such as North Korea’s nuclear ambitions. For the U.S., the journalists were released in what appeared to be a non-official humanitarian mission led by Bill Clinton, so the American government fulfilled its pledge not to negotiate directly with terrorist nations.

The New York Times reports that the administration will not change its strategy for dealing with North Korea, but that: “The release of the journalists could break an impasse between the United States and North Korea because, officials and outside experts said, there was virtually no prospect of reviving nuclear negotiations as long as the women appeared to be headed to a North Korean prison camp.” (Read the full analysis here:

http://www.nytimes.com/2009/08/06/world/asia/06kim.html?hp

In diplomatic negotiations, as in business negotiations, it is important to be able to reach win-win deals. Persistence and careful consideration of demands ultimately pay off in achieving a satisfactory resolution.

Haggling or Negotiating?

With the recession making budgets tighter than usual, the hot “new” thing is to haggle for a better price on EVERYTHING. This week’s Time Magazine has an article about haggling: “In the Recession, Shoppers are Becoming Hagglers.”

http://www.time.com/time/magazine/article/0,9171,1913774,00.html

This tells us that 56% of consumers have tried to obtain a better deal that what is being offered.

We used to think of haggling as something carried out in exotic open-air markets, or by housewives dealing with the fishmonger or something equally old-fashioned.

But the bottom line is that haggling is negotiating for a better price. In fact, haggling is using all sorts of business negotiation techniques to achieve the price you are willing to pay, for stuff that you need in your personal life.

Some cultures like the Arabs or Mexicans, are more open to haggling. Americans tend to be reticent about haggling, as this great blog post from The Digerati Life points out:

http://www.thedigeratilife.com/blog/index.php/2009/04/17/haggle-how-to-negotiate-price-haggling/

In this classic Reader’s Digest article:

http://www.rd.com/advice-and-know-how/how-to-haggle-like-a-pro/article15096.html

How to Haggle Like a Pro, we are given five haggling tips:

1) Use silence
2) Know that everything is negotiable
3) Talk about the competitor’s price
4) Don’t get angry
5) Keep the opponent to his/her promise

These are similar to some of the business negotiating techniques we teach at Karrass. Perhaps the next time you want to test what you have learned here, you should go to your local big box store and see if you can get yourself a deal!

Patience in Negotiations

Patience really is a virtue

“All you need is a little patience.” We’ve heard that for years, in church sermons, from our teachers, our parents, even from pop songs. As it turns out, patience is all you need if you want to win at negotiation. Patience might be the number one attribute of an effective negotiator.

Patience equals time, and more time may mean better negotiation outcomes. Patience is the supertactic of negotiations precisely because it gives you the power of time. You need time to understand what exactly is being offered and what the risks are. With more time, you can discover strengths and weaknesses. The bottom line is that patience brings more information to the table.

Patience (and its cousins persistence and determination) make up for inadequate resources. These are some things that patience accomplishes:

1. Provides more information
2. Allows you to discover other’s party needs and wants
3. Lowers other party’s expectations
4. Leads to concession
5. Forces realistic assessments
6. Lets problems rise to the surface
7. May change leadership or people involved in the negotiation

With patience, parties will resolve their differences. It’s like John Quincy Adams said: “Patience and perseverance have a magical effect before which difficulties disappear and obstacles vanish.”

Patience may be hard to come by in today’s fast-paced world. You may have to work at being patient, not just in negotiation but in life. Some tips to achieve patience include: figuring out why your triggers are, reminding yourself that things take time, and remembering what matters. For more tips on how to achieve patience, read this article in WikiHow. http://www.wikihow.com/Be-Patient

Have you ever lost a deal because you were impatient? Let us know in the comments.

Rules for Negotiations

Are there rules for effective negotiations?

According to Anthony Tjan, founder of Cue Ball, a venture equity bill, there are four main rules for effective negotiations. He writes about them at the Harvard Business School blog. These are his four rules:

1) Do your homework
2) Don’t negotiate against yourself
3) Get around stalemates
4) Let the other party walk away

These are all very good tips and we have discussed some of them here as well. According to Tjan, the golden rule is the last one, willingness to allow the opposing party to walk away. Essentially, Tjan is saying one should stick to one’s guns. One should be straightforward with what one is willing to do and not to do.

Read Tjan’s article here: http://blogs.harvardbusiness.org/tjan/2009/07/four-rules-for-effective-negot.html

Dr. Chester Karrass discussed 14 rules for winning in negotiation in his book: In Business as in Life—You Don’t Get What You Deserve, You Get What You Negotiate.

Here they are:

1) Pick the best place and time to negotiate
2) Have a “plan b” if the negotiation breaks down
3) Be stingy with concessions and leave room to negotiate
4) Buyers shouldn’t give seller quick counteroffers to their asking price
5) Don’t say yes too quickly
6) Buyers should always try to get cost breakdowns and sellers should not give them
7) Don’t make the first major concession
8) Watch concessions as deadline approaches
9) Shut up
10) Be skeptical
11) Stop hoping for the best
12) Watch out for funny money
13) Know how to compromise
14) You can always find a better deal for both parties


Are there rules you always abide by when you negotiate?

Using Memorandums in Negotiations

Memorandum of Agreement

After you conclude a negotiation, it is good practice to draw up a memorandum of agreement. Why? Simply to make sure that what you discussed is what you are shaking hands on. It keeps both parties in check and makes it difficult to change your mind. By having a written summary of the agreement, both parties are committing to the result of the negotiation.

A memorandum of agreement should cover all essential issues discussed during the negotiation. Since they can become the basis of a formal contract, memos of agreement should be detailed, covering all the specifics such as terms and conditions. A memo of agreement should also communicate the intent of the negotiation.

Here are some tips for writing the memo of agreement:


1. Take copious notes during the negotiation
2. Record all agreements and disagreements
3. Be straightforward and plain spoken—avoid legalese and jargon
4. Avoid omissions by having the whole team review the memo
5. Do not sign the memo unless it reflects your understanding of the agreement
6. Compare your final contract to the memo of agreement
7. Remember: the party that writes the memo has the advantage!

Some negotiators actually draw up a memo of agreement prior to the negotiation. The advantage to this is that it provides a very good framework for the discussion and will lead to the results you want.

Do you regularly draw up a memorandum of agreement? If not, why not?