New Year's Negotiating Resolution

One New Year’s resolution that will improve your negotiations

New Year’s has always been a time for resolutions. At year’s end, we have the perspective to look back and evaluate what worked best and what didn’t work so well. With a new year, we have a chance to correct course and improve our results.

A great business resolution for 2010 is to work to further improve your negotiation skills.

Your number one resolution in terms of business negotiations should be to improve your negotiation planning.

Even though negotiation planning helps achieve the best outcomes, many negotiators do not spend the time and effort to plan. Planning gives you a roadmap. A roadmap always lets you get to your objective more efficiently and more quickly.

Dr. Chester Karrass outlines the steps necessary to make your negotiation planning more effective in his book, The Negotiating Game.

Here are the top five steps to improve your negotiation planning:

1) Ask probing questions about objectives, aspiration level and power
2) Improve your information gathering processes
3) Differentiate between negotiation strategy and tactics
4) Increase your understanding on how negotiations work
5) Organize your team and resources to have maximum impact

You can learn more about negotiation planning by reading Dr. Karrass’ books. Consider attending a KARRASS course during the coming year and network with others who negotiate. You will probably meet some of your customers or suppliers.

Karrass wishes all of our readers a very happy and productive New Year 2010!

Five of the most memorable negotiation stories of 2009

As 2009 draws to a close, we look back at the year it was for business and diplomatic negotiations in the United States and around the world. Certain negotiations were in the news for a good portion of the year. Some were short but memorable. This year saw many mergers and acquisitions, sell-offs, labor disputes, and discussions of global issues such as climate change.

Here’s our round-up of five of the most memorable negotiation stories of the past year.

Health care reform
Marathon United States Senate sessions on health care reform culminated in the first Christmas Eve vote in decades. Health care reform is not a done deal yet, even though negotiations between lawmakers, the administration and various lobbies have been ongoing since early this year.

Copenhagen and climate change
In early December, the world witnessed two weeks of contentious discussions in the Danish capital that highlighted divisions between the developed and less developed countries. The results were not encouraging: only resulting in the adoption of a non-binding resolution on the reduction of carbon dioxide.

American journalists released from North Korea prison
Back in August, Kim Jong-Il gained a large concession from United States negotiators: a top-level visit from Bill Clinton. The North Korean leader wanted a big name in American politics to come personally to discuss the release of the two American journalists, Euna Lee and Laura Ling, who had been imprisoned and sentenced to 12 years of hard labor for illegally entering North Korea.

Chrysler
Back in April it seems the American car industry was going to collapse. Chrysler was on the brink of bankruptcy and there were hard negotiations going on between the U.S. Treasury and the carmaker’s creditors. In the end, Chrysler was able to declare bankruptcy, restructure the company and later emerge from bankruptcy.

New York Times – Boston Globe
In April, it seemed like the end had come for the venerable Boston newspaper. The Boston Globe’s owner, The New York Times was in negotiations with the Globe’s unions to cut costs dramatically or close the newspaper. In the end, the Boston Globe was saved.

What negotiations do you think were the most important or memorable? Please add to our list.

Negotiating with Santa...or what to do when asked for more hand you can handle.

Santa gets lots of requests: bikes, toys, cars, computers, you name it. Sometimes Santa gives you exactly what you ask for and sometimes, he doesn’t. The negotiation with Santa takes place before he brings your gifts: have you been naughty or nice? Santa goes all out for nice people, even throwing some extras, but if you’ve been naughty, well, there goes half your list.

As far as negotiations go, negotiating with Santa is straightforward. You only negotiate with Santa once a year. You come up with a written agenda listing your requests (or demands). Santa checks out your requests and then he checks out your background. If you are deemed to be “nice” he concedes on the items on your agenda. In return, Santa asks that you provide cookies and milk upon delivery.

If only all business negotiations were that simple!

If you are seller, unlike Santa, you are dealing with prices. You are not giving things away. And often, your customer asks you for a better price. Since you aren’t Santa, you can’t refuse to negotiate just because the customer hasn’t been that nice. But, sellers who are being asked to concede on price do have options.

There is a great article from the Tool Kit column in the New York Times: “Dealing with a Customer who Wants a Better Price” by Paul B. Brown. Brown gives advice to those who are being asked to lower their prices. He provides several pointers on how to best deal with this scenario:
1) Negotiate on the whole package, not just one piece at a time
2) Don’t lower you price, instead offer additional value (extra services, etc.)
3) Don’t give a concession without asking for one in return
4) Don’t let the other side’s problems become your own
5) Maintain and flex your sense of humor

Since you aren’t Santa, you aren’t likely to get cookies and milk after your negotiation, but you may still be able to please the buyer while maintaining your bottom line.

Karrass wishes our readers successful negotiations and happy holidays and a very Merry Christmas!

Is this a real issue?

There are two types of issues in any business negotiation: real issues and straw issues. You want to negotiate on the real issues. Straw issues are just like packing paper, just there as stuffing or filler, making it hard get to the real issues. Straw issues are distractions, bluffs, decoys... They are there to add an extra layer to get through.

However, negotiators sometimes use straw issues to achieve the results they want. By putting out straw issues, negotiators are giving themselves room to maneuver; they are creating ways to extract concessions. Negotiators who know how to use straw issues know that once these issues are removed from the table, the real issues seem more manageable, easier to deal with.

In labor negotiations, many demands often lead to more concessions. By having many demands on the table, labor negotiators are satisfying different parts of their membership. And with many demands in hand, these negotiators can give away the “straws,” thus giving themselves more room to exchange issues.

Sometimes it is hard to recognize which is a real issue and which is a straw issue. You don’t want to spin your wheels dealing with a straw issue. To get down to the real issues you will have to discover which issues are truly important. This will take a bit of patience and some investigation. Perhaps you hold some off-record discussions with the other party. You can ignore some issue and concentrate on what you want to concentrate on. If the issue is a straw issue, it will go away.

Straw issues may be annoying to the other party but they give you more space to negotiate. Chester L. Karrass has found that the more space you have to negotiate, the better you do in the negotiation.

How do you use straw issues? How do you identify straw issues when you are confronted with them?

Don't Be Afraid To Negotiate

Never fear to negotiate, no matter how great the differences are. It is impossible for both parties to recognize where and how an agreement can be made without undertaking the process of negotiating. The final outcome only becomes apparent after extended discussions.


Fear Impacts Your Performance


Fear can create enormous pressure on you and impact your negotiating success. Never get panicked into a final agreement by a time deadline. It is easy to fall into the time trap. Be skeptical about deadlines. Most of them are negotiable.

What if you make a mistake?


If you make an error in coming to an agreement, don't be afraid to admit it. Maybe it is an error in judgment or a mistake on some fact or statistic. Whatever it is, it can impact your final agreement. Deal with negotiating mistakes promptly. Admitting such mistakes takes courage, but immediate corrections are essential to arrive at a satisfying agreement.

Negotiation Is Not A Contest


Remember not to approach negotiation as a contest between you and the other party. Don't shy away from negotiating just because you are afraid of making a mistake or doing poorly. With a little effort, and good negotiating skills, a better agreement can be found for both parties at the same time. Use the tools you learned at the Karrass Effective Negotiating seminar. They will help you gain a better understanding of the entire negotiating process, what to look for, what to watch out for and how to take control of the negotiation. These tools will help reduce fear and make you feel more comfortable in all of your negotiations.

If men are from Mars and women from Venus, do they negotiate differently?

Do men and women negotiate the same way? Are they equally effective?

In a blog post “Can ‘Nice’ Girls Negotiate” on the Harvard Business Review blog, Whitney Johnson talks about salary negotiations and gender perceptions. Apparently, “nice girls” do not ask for more, and if they do, they may actually get penalized. She quotes a Washington Post survey that found:

“...both men and women were more likely to subtly penalize women who did ask for more, the perception being that women who asked were "less nice."

Apparently, women who are aggressive negotiators are being perceived as less feminine. Men are expected to be more aggressive, therefore they are perceived as “proactive.”

On the other hand, the authors of When Gender Changes the Negotiation, from the Harvard Business School, found that gender is NOT a good predictor of negotiation ability. Here’s an excerpt from an article about the subject:

“...neither women nor men perform better or worse across all negotiations. However, certain types of negotiation can set the stage for differences in outcomes negotiated by men and by women, particularly when (1) the opportunities and limits of the negotiation are unclear; and (2) situational cues in these ambiguous situations trigger different behaviors by men and women.”

They go on to describe that certain situations can affect disparity in negotiation, specifically, highly competitive situations and when negotiating on other's behalf. Competition seems to benefit men, as society expects men to be more competitive than women. On the other hand, women perform better when they are negotiating for others or acting as an advocate.

The bottom line seems to be that women and men are both equally good at negotiation but that societal and cultural norms may affect how each gender is perceived.

Do you negotiate differently when you are dealing with a man or a woman? Have you noticed differences in women-led versus men-led negotiating teams? We’d like to get your first hand accounts.

How to deal with agressive behavior

When you start a business negotiation, you don’t know what you will be faced with. As the negotiation goes forth, roles, personalities and behaviors unfold.

In some cases, the other party is aggressive. Unfortunately, aggressive behavior is often present in most negotiations. Some negotiators believe aggression helps to “fire up” a team and actively cultivate aggressiveness.

What is the best way to deal with aggressive behavior?

To contain aggressive behavior, you need an understanding of the situation, and a strategy to deal with it.

Perhaps your first reaction is to be conciliatory. However, if you always act as the conciliator, you may end up giving the other party the upper hand.

If, on the other hand, you respond with equal aggression, you may escalate the conflict and end up in a deadlock.

The best strategy is to mix it up: sometimes be cooperative, and sometimes be aggressive to gain the element of unpredictability. When you are not predictable, the other party will have to search for ways to react to you and work with you, thus helping to ease the negotiation.

The bottom line to dealing with aggressive behavior is to be prepared for it. Do not let yourself be bullied by aggressiveness. Finally, use both aggressive and conciliatory behavior to control the situation.

How do you deal with aggressive behavior? Share your tips in the comments.

Should someone else represent you in a negotiation?

Would you hire someone else to represent your business in a negotiation? The short answer is yes. You probably do it all the time. Most small businesses have lawyers, who represent them in legal and contractual proceedings. Some small businesses rely on their CPAs to represent them in any tax disputes.

Some businesses have made it their business to negotiate in your stead. For instance, there are companies who are in the tenant representation business—they represent small businesses in commercial real estate transactions.

Tenant representatives negotiate leases and other commercial real estate matters. They focus on real estate and can offer specialized knowledge. In an article on Fox Small Business, Howard Ecker, who was one of the first people to offer tenant representation, shared his insights about the recession and how it affects small business’ real estate transaction. Among his thoughts:

“Smaller tenants usually have a disadvantage compared to larger tenants when it comes to renegotiating their leases since they take up less space. But given the economic downfall, even small businesses have unprecedented leverage in negotiating lease terms as building owners and managers contend with high vacancy rates, the looming risk of insolvency among existing tenants and the slow thaw occurring in the credit markets making deals increasingly difficult to fund and close.”

Read the whole article here: http://www.foxsmallbusinesscenter.com/strategy/2009/12/15/post-recession-landscape-small-business-landlord-relations/

The point here is that people who are specialists have insider knowledge that can benefit you in a negotiation. So, in cases where you need knowledge and expertise that you don’t have on your team, you should consider hiring a specialist to negotiate on your behalf.

What are your thoughts about using specialized negotiators?

World Peace is a nice goal but not a good demand.

On December 10, several San Francisco State University (SFSU) students were arrested for protesting budget cuts and tuition increases at their school by barricading themselves inside a university building. The New York Times reports that they had listed their demands and grievances on a blog:

“Along with indignation over budget cuts, a blog listing the protesters’ demands included forgiveness of all student loans and ending the wars in Afghanistan and Iraq. With demands far beyond the purview of school administrators, negotiations with the students (were nearly impossible)...”

The New York Times article can be read here: http://www.nytimes.com/2009/12/11/education/11arrest.html

Perhaps it is a lack of maturity on the SFSU students’ part, but when you are negotiating you should not make extraneous and unrealistic demands. It won’t help your cause. Furthermore, every negotiator needs to differentiate between needs and wants. In this case, the SFSU students want to make a point but they are doing it at the expense of negotiating their real need: lessening the impact of the university’s budget decisions.

As Dr. Chester L. Karrass writes in his book In Business as in Life You Don’t Get What You Deserve, You Get What You Negotiate:

“...in negotiation...our job is to discover what the other side says they want and what they really need.

If we can give the other party what they need, the will forget many of the wants or demands they asked for at the beginning of negotiation. That’s when both sides move toward agreement.”

What should SFSU students do to be able to negotiate better with the university administration?

Can a negotiation go too long?

Business negotiations can be short when agreement is reached quickly. Other negotiations can be drawn out, with both sides making small concessions but not reaching agreement. How long can a negotiation last before it is too long?

It is obvious that the more complex the issues being negotiated are, the longer the negotiation is going to last. The same holds true when issues are highly contentious or polarizing since more ground will have to be covered to bring both sides closer to agreement.

Some negotiators use time to control the negotiation. They test patience to see if they can reach an agreement that is favorable to them. Some negotiators use the “stretchout” maneuver, which involves extending the negotiations over a long period to be able to reveal some uncertainties (e.g. government decisions or new pricing structures) that could affect the negotiation outcome.

Deadlines may be an effective tool to limit the length of a negotiation. By imposing a deadline for decision, an agreement may be reached successfully. However, as with any tactic, deadlines do not always work and they are not always respected.

In labor negotiations, unions may have rules to control the length of the discussions. For instance, the Oregon School Boards Association (OSBA) has made the following rule about length:

“After the first bargaining session, parties have 150 days to exchange proposals. If both parties agree, this period may be shortened or extended. Either party may ask for a state-appointed mediator at the end of this period. The parties are required to spend 15 days in mediation. Either party can then declare impasse. “
From the OSBA site here: http://www.osba.org/Resources/Article/Employee_Management/Labor_Negotiations_FAQ.aspx

There are some dangers in having negotiations go too long:

* Negotiators may grow fatigued and disinterested
* More issues may be introduced than were originally on the table
* Patience may be tested causing decisions that may not otherwise have been reached

On the other hand, some issues are too complex and really do require lengthy discussions. Currently we see the climate negotiations going on in Copenhagen. With many parties involved, and many issues at hand, we can expect those negotiations to be ongoing.

When do you think a negotiation has gone too long?

To concede or not to concede, is that the question?

Perhaps the better question about concession is: what to concede?

Concessions are a fact of life in any business negotiation. Sometimes you must make a concession to get what you want. However, this does not mean your side should make all the concessions, or that you just concede willy-nilly. You should have a strategy behind your concessions.

Here are some key findings about concessions, from Dr. Chester L. Karrass in his book Give and Take:

Losing parties make the first concession on major issues
Sellers who are willing to take less get less
Buyers who start with low offers do better
Negotiators who concede a little bit at a time do better
Negotiators who make the largest since concession do poorly

Taking those points into account, here are some concession tips:

Concede later rather than earlier
Keep track of your concessions
Tit-for-tat concessions are not necessary
Make the other party work for your concession
Don’t give in too much or too fast

Remember, conceding does not always mean giving something away. Here are some “free” concessions:

Listen attentively
Give good explanations
Be nice
Promise something for a future transaction
Share knowledge

How do you deal with concessions? Please share in the comments.

Cross-Cultural Negotiations

Diplomats have always engaged in cross-cultural negotiations, since that is their specialty. But as more companies become multi-national, more business negotiators will have to learn the ins and outs of cross-cultural negotiation.

In cross-cultural negotiation, cultural differences and expectations add challenges to the negotiation process. No longer is it about discussing and reaching an agreement, but it is about being aware that what is appropriate in one culture may not be appropriate in another. The first rule of cross-cultural negotiations is to be aware that cultural differences exist and that they will affect how you communicate and deal with the other party.

More companies than ever are dealing with China. On the China Law blog, there is blog post entitled China Negotiating Strategy: An Expert’s Perspective, which lays out a few “rules” for dealing with Chinese businesses. For instance, rule number four tells us that normal contract rules in the United States are seen negatively in China, and the author says: “I have always had the sense that the typical Chinese company views the length of the contract as being inversely proportional to the strength of the relationship and though it is important that the contract have all of the critical terms, this is a big incentive to keep it as short as possible.”

Clearly, assumptions will be tested during a cross-cultural negotiation. In the example above, Americans may assume that business negotiators like and want a detailed contract, but the Chinese view such a document with suspicion.

Japan is another country where Americans frequently do business. Behavioral rules in Japan are much different from those in the United States, and these will influence how you negotiate. For example, according to this blog post about Cross Cultural Etiquette and Manners: Japan: “A Japanese person finds it difficult to use the word "no". He may respond with "yes" to most of your questions but that does not necessarily mean that he is agreeing; it may really be a "no". This knowledge will help you in carrying out business negotiations with Japanese.”

This week, the world will see first-hand how cultural differences impact negotiations during the United Nation Climate Change Conference in Copenhagen, as 192 nations participate. Already, the AFP is reporting: “Analysts, though, stress the deep gap between the demands of developing countries and the willingness of rich countries to dig both into their pockets and into their carbon emissions.” (From: http://www.google.com/hostednews/afp/article/ALeqM5jJ3RI164MEyRvQc0IpbGzzZDIccw)

Do you have any cross-cultural negotiation tips? Please share your insight in the comments.

Short vs. long-term relationships

If you are a runner, you know it is much different to train for a short race than to prepare for a marathon. You go all out for a sprint and you focus on speed. When you are running a marathon, you are working with endurance, not speed. You must pace yourself so you can run all 26 miles.

It is the same when you negotiate in the short-term versus the long-term. If the other party is someone you are only negotiating with once, you may decide to sprint to a resolution and negotiate more aggressively. However, an aggressive strategy is not going to work so well if you are trying to develop a long-term business relationship. As in a marathon, in a long-term business relationship, you will take it slower and you will focus more on your end goals.

As Chester L. Karrass writes in his book Give and Take:

“One of the big trade-offs in negotiation is that of balancing short-term victories against long-term goals. The other party can be badgered, coerced or threatened into doing what you wish. People who give in under these conditions remain hostile.”

The bottom line is that you have more to gain in a long-term relationship than in a short-term one. Creating hostility to achieve short-term goals may endanger any long term gains. It’s like that old saying says: “don’t burn your bridges.”

Any business negotiation should be approached with a strategic mind-set. If your goal is to establish a long-term relationship, be sure to create a cooperative negotiating environment. You are going to be seeing the people at the table again and again. Think of the big picture. How much is a win worth now versus a win in the long-run?

How do you handle your short-term negotiations differently than negotiations with long-term partners?

A must-have asset for negotiation success.

Although there are many skills you can learn in order to be a successful negotiator, there is an asset that will make you a stand-out: confidence.

In fact, confidence is a key ingredient in all type of business success. In an article about business development for the FindLaw website, Sara Holtz writes the following:

“I've just finished reading Rosabeth Moss Kanter's book, Confidence. The basic premise of the book boils down to: Winning begets winning, and losing begets losing, because of their respective impact on confidence.

For me, this drove home the importance of developing confidence in your business development acumen in order to have business development success.”

Read full article here:
http://practice.findlaw.com/law-practice-management-articles/01180/000058.html

Without a humble but reasonable confidence in your own powers you cannot be successful or happy. ~Norman Vincent Peale

Confidence at the negotiating table gives you power. Lack of confidence will result in the other party doubting your commitment and/or your knowledge. Furthermore, when you are confident, you have conviction and conviction is extremely persuasive. Clearly, in a negotiation, persuading the other party to agree to your views is your principal goal.

The good news is that you can increase your confidence level. Confidence results from your thoughts and actions. One way to increase your confidence level is to focus on positive thoughts. Nothing kills confidence like negativity. You can find other tips for increasing your confidence level here: http://www.icbs.com/Kb/inspiration/kb_the-top-ten-keys-to-self-confidence.htm

Do you have any confidence-building tips to share? Please let us know in the comments.