Argument or Negotiation?

When is a conversation an argument and when is it a negotiation? Although both arguments and negotiations try to resolve conflicts, there are differences.

Merriam-Webster defines an argument as “a): reason given in proof or rebuttal and b): discourse intended to persuade.”

Generally, in an argument, one side is trying to persuade the other that there is one correct way to view a situation. That side will work hard to persuade the other side of the validity of the argument. This is why many times arguments escalate.

As this article about persuasion from Suite 101 http://businessmanagement.suite101.com/article.cfm/resolving_conflict#ixzz0SblNpnf7
points out:

“When persuasion doesn’t work most people try again. They present their argument in a different fashion, hoping that their message will get through to the other side. But the other side has heard, considered, and firmly rejected the argument. Each repetition will only crank up the volume on an already unmistakable message: they disagree and repeated arguments will only aggravate them.”

Arguments tend to polarize and harden positions, sometimes resulting in grievances for both sides. Arguments can get personal and heated. Arguments tend to be zero-sum: only one side can be right. Negotiations, on the other hand, should be win-win.

Negotiations work to bridge positions, find the points of agreement so that a settlement can be reached. Negotiations find common ground, or areas where compromise can be made to achieve goals.

Negotiations involve some sort of bargaining whereas arguments require a complete turnaround in point of view.

In the end, if your goal is to achieve a solution to a problem, you don’t argue, you negotiate.

The Making of a Good Negotiator

Are good negotiators born or made? Certainly, there are innate personality traits that make some people become good, or even great, negotiators.

However, there are some negotiation skills that can be learned, which also improve your negotiation ability.

Here are some traits and skills of a good negotiator:

Practical intelligence/common sense
Verbal ability
Ability to think and communicate clearly under stress
Personal integrity
Good self-esteem
Emotional intelligence (ability to understand others, their motivations/reactions)
Aspiration to achieve
Planning skill
Product knowledge
Ability to research and understand market conditions
Ability to stay calm under pressure
Ability to deal with uncertainty

It could be argued that even if you are not born with some of these traits, you can develop them over time. Sometimes you can compensate for any areas of weakness by becoming highly adept at other areas. For instance, you may not have great verbal skills and so you communicate better in writing.

Just having or developing these traits is not enough. These traits simply provide the foundation for being able to negotiate well. Negotiation itself is a skill that you can learn through training seminars like the many offered by Karrass.

Which do you think the number one skill or trait needed by good negotiators?

Negotiating Tactics: Techniques

In our last post, we discussed negotiating maneuvers. This post is dedicated to negotiation techniques. Techniques are mechanisms that help you reach your goals. It is important to remember that neither maneuvers nor techniques are strategies. They are tactics to support your strategies. When well conceived and used appropriately, techniques will bring you added power in your negotiation.

Below is a table from The Negotiating Game, by Chester L. Karrass that lists a number of techniques:

1. Agenda
2. Secrecy Measures
3. Questions
4. Nonverbal Behaviors and Communication
5. Statements
6. Media Choices
7. Concessions
8. Listening
9. Commitments
10. Caucus
11. Moves
12. Formal and Informal Memorandum
13. Threats
14. Informal Discussion
15. Promises
16. Trial balloons and leaking information
17. Recess
18. Hostility Relievers
19. Delays
20. Temporary Intermediaries
21. Deadlock
22. Location of Negotiation
23. Focal Points
24. Technique of time
25. Standards

Because of the quantity of techniques available, we will only discuss the first one: agenda.

Agendas are more commonly associated with diplomatic negotiations than with business negotiations. Agendas help to shape the negotiation, listing specifically what issues will be covered and their relative importance. Using agendas can keep negotiations on track.

Obviously, at the heart of using an agenda as a technique is the selection and placement of issues. You may have to bargain with the other side about which problems to introduce into the agenda, and what priority to assign to them. Dr. Karrass says this: “Because problem-solving depends on open discussion and value-sharing, the agenda should also consider whether problems should be solved at a different place and time...”

As you can see, using an agenda allows you to bargain about and prioritize your negotiation issues. It is a valuable tool to define and thus accomplish your goals.

Which technique do you favor? Tell us in the comments.

Negotiating Tactics: Maneuvers

There are two types of negotiating tactics: maneuvers and techniques. In business negotiations, a maneuver helps to influence the situation in order for you to reach your goals and defend your position. Techniques are mechanisms that work to reach your goal.

There are ethical and unethical maneuvers, and you may deal with both in any given business negotiation. If your opponent lacks integrity, you may be subject to unethical maneuvers. To defend against unethical maneuvers, you must be able to recognize when these are being used.

Dr. Chester L. Karrass classifies maneuvers into six categories:

1) Timing: These set the tempo of the negotiation and include deadlines, speed and patience.

2) Inspection: To verify information you may use maneuvers such as third party access to records, open inspection of documents and full disclosure.

3) Association: Define who are friends and who are enemies. Your associations can strengthen your bargaining power. Association maneuvers include creating alliances and disassociations.

4) Authority: Authority maneuvers deal with decision-makers, and include restricting the right to make final decisions (limited authority) and using third-party authority (arbitration or mediation).

5) Amount: Maneuvers that deal with prices, quantities or degrees include making fair and reasonable offers, using bulwarism (take it or leave it) and non-negotiable demands.

6) Detours: These maneuvers are designed to reduce the amount of information the other side can gather on you. Some are decidedly unethical such as using decoys or denial. Other detour maneuvers include playing good and bad guys, the scrambled eggs maneuver and low-balling.

Do you have a go-to negotiation maneuver? Why and how do you use it? Please share your experiences in the comments.

Predictable Behavior

Wouldn’t it be nice if you could predict exactly what the other side was going to do during your next business negotiation? Well, you probably can, and no, you don’t need a crystal ball. All you need is an understanding of what the other side has done before to gain insight into the predictability of people.

Most people are predictable. Perhaps you don’t act the same in every situation but you most likely follow a set pattern. You also tend to react predictably. For instance, some people will always use humor to defuse a stressful situation.

In his book The Negotiating Game, Dr.Chester L. Karrass tell us the following about predicting behavior:

“The best way to predict behavior is to look at a person’s history. A careful study of the other person’s habits, temperament, opinions and values will reveal useful patterns. The personality traits of a person tend to guide his or her behavior in accordance with the individual’s major intentions.”

Knowing the other person will obviously help you predict his or her behavior. If you have negotiated with him or her before, you have a pretty good idea of how he or she will react. But what if you are negotiating with someone you don’t know and you haven’t had a chance to do more research on? The most important rule about predicting behavior is to know that people will always act to protect their self-interest and their self-image.

Every negotiator would do well to become a student of human behavior. Being able to predict reactions and behavior will certainly give you an edge at negotiation time. You may even be able to adjust your behavior to elicit the type of reaction you are looking for.

Have you been able to predict the other side’s behavior? Has that helped you when you are negotiating?

Making Concessions

In most negotiations, both sides move from their original positions. It is wise to leave yourself 'negotiating space' when you make your initial offer.

Each side to a negotiation usually compromises by making some concessions to reach agreement. Careful concessions help guide you through this process towards a mutually satisfying agreement. Below we list some tips on things to keep in mind when making concessions.

Don't Give Free Concessions
Never give a concession without obtaining one in return. Don't give concessions away free or without serious discussion. A concession granted too easily does not contribute to the other party's satisfaction nearly as much as one that they struggle to obtain.

Craft Your Concession Wisely
Concessions that are poorly made can serve to further separate the parties rather than bring them together. A concession may serve to raise the aspiration level of the other party if it is interpreted as a signal of your weakness. Don't be too quick to give a concession, and don't 'shoot from the hip' -- think through the potential impact of any concession you give. How a concession is made is as important as the value of the concession.

Keep Count
Never lose track of how many concessions you have made, regardless of their value. The overall number is important and can provide bargaining leverage. Keep a written record of your concessions.

Stay Flexible
Flexibility is like money in a checking account. Do not use up your "bank account of flexibility." Every concession should bring you closer to some goal. If you use up all of your potential concessions your bank account is down to zero and deadlock is harder to avoid. Always look for a concession that the other side will value more than what it really costs you.

Build In a Way to Retreat
Don't feel constrained to stick with a concession on a specific issue. The whole agreement is more important than individual issues. Indicate to the other side that all concessions you give are tentative and based on a satisfactory overall agreement (i.e. "tie a string"). Some people tend to stick to interim concessions when they should not. They fear that their integrity may be questioned if they retreat from concessions they have made. Such rigidity can be costly.

Building your negotiating team

Many business negotiations take place with groups of people representing each side. It is clearly a major priority to turn a group of negotiators into a winning team.

Dr. Chester L. Karrass provides several tips on how to form a winning negotiating team.

Designate a team leader. The negotiation team leader controls the length and direction of discussions. In order to succeed, team leaders should be flexible, tactful and have good time management skills.

Team members should be specialists/experts in a given area.

Each member should be given a specific job.

Team members should like and want to negotiate. If a specialist is not “into” negotiating, don’t recruit him or her to the team, no matter how much of an expert this person is.

Engage in team planning. Planning and preparation should take place several days or weeks before the negotiation.

Closely match the other team's numbers. It is not good to be outnumbered.

Have an official note-taker on your team.

Discourage open conflict. You must present a unified front to your opposition.

There is no doubt that a well-prepared team of experts with a good leader will create a positive dynamic when entering a group negotiation.

Do you have any tips to build a winning negotiation team?

Negotiations in the Spotlight: Japan Airlines Corp.

Financially troubled Japan Airlines Corporation (JAL) is negotiating with both American Airlines and Delta Airlines. JAL, which posted a loss of $1 billion in the March-June quarter, is looking for financial support. The Japanese airline has a reported $8 billion dollars of debt, according to Joshua Williams of the Japan Headlines Examiner blog (http://www.examiner.com/x-16352-Japan-Headlines-Examiner~y2009m9d13-JAL-in-separate-business-talks-with-Delta-and-American-Airlines ).

Currently, JAL code-shares with American, and is part the OneWorld alliance, which also includes American. Intense negotiations have been taking place over the past four weeks to discuss a joint business venture “in which the two carriers would seek antitrust immunity to work closely in setting schedules and prices for service around the world,” reports the Associated Press (article is here: http://www.google.com/hostednews/ap/article/ALeqM5h82j-RWQfv5PpmCocqx7gOGb5m2gD9AM3EH00)

Delta, which does not currently have a Japanese code-sharing partner, is seeking access to the Haneda airport. Currently, Delta has a Japan presence at Norita Airport, though its partnership with Northwest. Delta is offering to buy a $300 to $500 million stake in JAL. If Delta wins the negotiation, JAL would become part of the SkyTeam Alliance and drop the OneWorld membership.

These negotiations have been highly secretive and are in process. ATWOnline reports that JAL “would not comment on the reports, adding that ‘(it) is looking at a wide range of measures, including potential tie-ups with other airlines. But thus far, no decision has been made on any.’ Delta declined to comment to this website.” Read the full story here: http://www.atwonline.com/news/story.html?storyID=17847

Are you flexible?

We are not asking if you can touch your toes or excel at yoga, rather, can you change your tactic, expectations and goals depending on the situation? Can you re-prioritize? Are you capable of reassessing?

Flexibility is a very important trait in business negotiations. Flexibility is a key to compromise, which in turn is key in reaching concessions and conclusions.

Flexibility is also key in choosing the right negotiation tactic. Tactics work differently with different people or with changing market situations. In order to choose the right tactic, you must be flexible. Don’t try to stick with a tactic because it worked yesterday.

Dr. Chester L. Karrass counsels that negotiators should reassess their tactics in answer to the following questions:

1. Can I combine tactics for better results?
2. Is this a good time to change tactics?
3. How will the opposition interpret this tactic?
4. Will this tactic have unintended consequences?

Use your business judgment to reassess your tactics, and change course if necessary. Being inflexible, just like in yoga class, will leave you stuck in one place and not able to move more freely.

What do you do to flex you tactics muscles? Have you lost a negotiation do to inflexibility?

What is your mission?

Before you go into any negotiation, you prepare. You know what you are willing to do to reach your goals. But are your goals in line with your company’s goals?

Most companies and organizations have a mission statement (and some even have a vision statement), which outlines the company’s goals in the market. As a business negotiator representing your company, you should be familiar with the mission. The mission can help organize your negotiation priorities.

Entrepreneur Magazine gives the following definition for a mission statement:
A sentence describing a company's function, markets and competitive advantages; a short written statement of your business goals and philosophies.

The article goes on to say the following:

“The mission statement reflects every facet of your business: the range and nature of the products you offer, pricing, quality, service, marketplace position, growth potential, use of technology, and your relationships with your customers, employees, suppliers, competitors and the community.”

(Read full article here: http://www.entrepreneur.com/encyclopedia/term/82494.html)

It is imperative for negotiators to understand exactly what they are representing. A company’s mission statement helps encapsulate this. Also, when you enter any negotiation you have a certain set of goals, both for the negotiation and for the company. In fact, in deciding your goals for the negotiation, you should have a sense of where these fit in the overall company business strategy.

If you are not aware of your company’s mission, it is time to familiarize yourself with it. If your company does not have a mission statement, it can be extremely helpful to develop one.

How familiar are you with your company’s mission statement? Is it helpful to you when you negotiate?

Need more information?

Buyers need information in any business negotiation. The more information a buyer has, the better his or her position. But what happens if the seller is unwilling to give up the information? Can a buyer force a seller to part ways with crucial numbers? The short answer is no, a buyer cannot force a seller to give up information.

Here is the conundrum, as set forth by Dr. Chester L. Karrass in his book Give and Take:

“Sellers should start on the basis that cost and pricing methods are nobody’s business but their own. A buyer is well advised to insist that part of the price paid is access to full cost and production visibility. He or she has the right to know what he or she is buying and why the price is right.”

Of course, how much information is exchanged depends on the parties involved. Some sellers will be more than willing to give information, especially if it puts them in a better light than their rivals. However, some sellers deal with confidential processes. The formula for Coca Cola comes to mind. Everyone knows that Coke is made from a secret formula that is considered a trade secret. Perhaps one of the ingredients is what affects the price of Coke, but in no way would negotiators for Coke ever reveal their formula. They are entitled to privacy because this information gives them an edge in the market.

In the end, no entity can force a seller to give up private information. A buyer will have to use other means to figure out whether he or she has a good deal. In fact, a buyer should probably engage in a fair amount of fact-finding before the negotiation. Buyers can study the seller’s business history, previous negotiations, financial data and other publicly accessible information.
What do you do when you need more information and your opponent won’t give it up?

Breaking the Ice

You have new members on your negotiating team. You are negotiating with people you have never dealt with before. You are at a team building exercise. In all of these situations you need to break the ice. You need to get people talking to each other.

There are many ice breaking exercises out there. They are very easy to implement and successful at getting people to talk to one another.

Before you choose an ice breaking exercise, you will have to consider:

How many people will be involved
How much time you have
Whether you will have access to materials
What your purpose is

For more tips on how to choose an ice breaking exercise, check out this article in MFTROU (Management for the Rest of Us): http://www.mftrou.com/meeting-ice-breakers.html

There are several types of ice breaking exercises, suited for different purposes:

Ask participants to share a little known fact about themselves
Ask questions such as: What would you do if you won the lottery? Have the participants share their answers.
Divide the group into pairs and have them “interview” each other. Each person will introduce their partner to the group
Play the birthday game: have all participants get in line by order of their birthday (January through December)

Read more about ice-breakers here:
http://www.mindtools.com/pages/article/newLDR_76.htm
http://nonprofitmanagement.suite101.com/article.cfm/free_meeting_ice_breaker_ideas
http://www.training-games.com/pdf/40FreeIceBreakers.pdf

Do you have a favorite ice-breaker? Please share in the comments.

Are you at an impasse?

You have reached a point in your business negotiations where neither side is willing to give an inch. You are at an impasse. How do you move beyond it? Can you move beyond it? Chances are good that you can break the impasse and reach an agreement if you understand what is causing the impasse and provide some options to move things along.

Impasses happen for many reasons, and not all of them are major. Indeed, some have to do with issues like personality differences, organizational troubles and fear of failure. In short, there is a huge human dynamics component to any impasse situation that needs to be taken in to account.

To break an impasse you have to develop a situation that allows new alternatives to emerge. To create this situation, we suggest considering these moves:

Change the team make-up (members or leader)
Emphasize the cooperative problem-solving approach
Change payment terms but not the actual dollar number
Change specifications or terms
Use humor to release stress and dissipate bad feelings
Add “sweeteners” to the deal

It may be that once the talks get moving again, and new options are put forth, that the old options may look better. An impasse may work as a way to get where you want to be, if you handle it right.

How have you broken an impasse? Tell us in the comments.