Negotiation Space

Failed negotiations can lead to business losses, even business closure as was the case with American Axle and Manufacturing in Buffalo, N.Y. The Detroit News reports that American Axle was unable to reach an agreement with its labor union, resulting in a decision to close the plant at the end of the current contract.  It is clear that in this situation, the outcome of the negotiations was lose-lose.

How do negotiations fail? There are many reasons that the parties cannot reach agreement. In the article “Six Ways to Blow a Negotiation” Lisa Yoon lists the following reasons:

1. Poor planning
2. Poor/misguided assumptions
3. Failure to listen
4. Being culturally insensitive
5. Failure to establish the bases of negotiation
6. Accepting an offer too quickly

To avoid failed negotiations, you will need to pay attention to these factors. Michael Crom, writing in USA Today, gives “5 tips help you meet with prospective clients.” He emphasizes the following:

• Preparation and planning
• Building rapport with the other party
• Building your credibility

You will notice that planning is key to avoiding failure. Planning includes forecasting, that is, thinking about what the other party will want and how you will respond.

The point of negotiation is to find common ground and reach an agreement to satisfy all parties involved. The inability to connect with the other party by listening to their concerns and finding commonality will no doubt lead to failure.

With so many good articles on topics relating to business and negotiation around the web, Negotiation Space has rounded up three for your perusal.

Mean people win?

Although it is not something we advocate, it seems being mean and disagreeable can be advantageous for men in a negotiation. According to the article “Nice Guys Finish Second, Women Finish Last” on LiveScience.com,  being disagreeable is advantageous for men in salary negotiations. The article says:

Nice guys don’t get ahead in salary negotiations, but they don’t finish last either, a new study finds. That position is left for women, whether or not they’re nice.

Men with disagreeable personalities out-earn men with agreeable personalities by about 18 percent, according to research to be published this fall in the Journal of Personality and Social Psychology.

Do you need to make bad trade-offs?

Margaret Heffernan, who wrote the book “Willful Blindness,” argues in the article “Do Tough Decisions Require Making Trade-offs?” on Bnet.com, that being a good leader means not accepting BAD trade-offs. She writes:

decision-makers were determined to find solutions they could be proud of and not to accept bad trade offs. That required a high degree of patience and intellectual rigor on their part. But it also required that they reject the simplistic narrative that polarizes extremes and urges a cynical or lazy acceptance of simple answers. Just because Washington can’t do it doesn’t mean you can’t do it in your business. Strategy, after all, isn’t an election. It is supposed to be a thought process.

How to give your brain a boost

Good thinking is crucial in business negotiations. To improve your brain’s plasticity, according to the article “Give Your Brain a Boost” on Bnet.com, follow some simple suggestions. These tips include:

• Exercise
• Watch your words
• Eat nuts

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The debt ceiling talks between Congress and the White House have brought the importance of negotiations front and center. There have been many articles written about why the talks stalled or why a deal was so hard to negotiate. All in all, it has proven that knowing how to negotiate is an important skill to have in politics as it is in business.

We came across many great articles about the debt ceiling negotiations but wanted to share two in particular.

First, Business Insider had an article entitled “Why We Need More Ethics in Business Negotiations.” The article argues that negotiators sometimes ignore ethical considerations just to make a deal:

many corporations will ignore ethical considerations when making business decisions due to pressure from intense competition, the quest for higher profits or simple greed. Equally, ‘winning the deal’ sometimes becomes more important for executives than compromising to establish a relationship that could be used to forge multiple deals in the future.

Dealing ethically in business means wanting to establish a reputation for behaving fairly and honestly with competitors and clients. It also means taking into account all stakeholders in the deal – not just the two parties negotiating, but the entire community that may be affected by the long-term consequences

Read more: http://www.businessinsider.com/why-we-need-more-ethics-in-business-negotiations-2011-7#ixzz1Tmhvc2SC

Steve Adubato writing in the New Jersey Star Ledger finds much to learn in “Debt battle in DC offers negotiating lessons aplenty.”  Adubato’s main lessons are as follows:

• Keep your eye on the ultimate goal
• Have a shared goal with the other party
• Listen with an open mind
• Set clear deadlines

What have you taken away from the debt ceiling negotiations? Please share in the comments.

We aren’t political at Negotiation Space, meaning that we don’t take sides or present a political point of view. On the other hand, politics and diplomacy are often the setting for negotiations, and nowhere is that clearer than in the current negotiations between the White House and the Congress on raising the debt ceiling. As you probably know, the deadline for reaching a deal is August 2 and time is running low.

Rhonda Abrams, writing in USA Today, thinks that the politicians involved in the debt ceiling negotiations can give us lessons how NOT to negotiate. Her article (“Today’s politicians can give advice on how not to negotiate”) is definitely worthwhile reading. Some of her key points are these:

• Politicians are viewing negotiations as a zero-sum game rather than a win-win scenario

• It is important to find a way, together, to make a deal work

• Negotiations should be about problem-solving not posturing

• Avoid mutual destruction—what is there to gain if everybody loses?

If there ever has been a need to reach an agreement, it is now. Annie Lowrey writes in Slate Magazine that the lack of agreement is leading to a major loss in consumer confidence, which in turn has other negative consequences on the economy. The stakes are high. Lowrey writes:

In short, the government has already managed to spook consumers, investors, and contractors, sapping confidence and an appetite for risk from an already ailing economy. Granted, the effect should be temporary. As soon as Congress approves a raise in the debt ceiling, everyone should breathe a sigh of relief and get back to business. But, as noted in the Times, some investors may feel that Washington has damaged its market credibility, possibly raising its borrowing costs. That ill effect of this nonsense might be permanent.

Perhaps everyone involved in the debt negotiations should take an Effective Negotiation seminar from Karrass to learn how to stop opposing each other and find an agreement!

It has been dominating the sports news for the past week: the National Football League owners are in negotiations with the NFL Players Association (NFLPA) over a new collective bargaining agreement.  The deadline to reach agreement was extended by a week (to Friday, March 11) last week after unproductive negotiations. The NFL negotiations are being overseen by a federal mediator, who facilitated the extension.

What are the main issues at stake? According to an article “Optimism, but five days and two issues remain,” in the weekend New York Times, the issues are economic:

how to divide annual revenue and a new rookie compensation system.

The analysis from the Times suggests that the parties are still very far apart on those issues, and it is doubtful that an agreement may be reached by Friday. However, there is some hope that, as the Times reports:

that enough progress could be made by the end of the week on the key elements necessary to start a new league year — what the salary cap will be, what the rules of free agency are and what the rookie compensation model will look like — that the sides could then firm up the rest of the details in another week to 10 days. The league would then resume off-season business as usual, with free agency likely to open just past mid-March.

These negotiations have been drawn-out, and the length of the negotiating process has been wearing down both sides to the point that they are less willing to negotiate. Additionally, Judge David Doty of the US District Court found that the NFL had violated the terms of its collective bargaining agreement. NFL Commissioner Roger Goodell

dismissed the notion that the NFL became more willing to negotiate after Tuesday’s decision by ….Doty that sided with the union in a case about whether the league can have access to about $4 billion from TV contracts. The union accused the NFL of improperly negotiating deals to have money available in event of a lockout, and Doty — who has jurisdiction over NFL labor matters under the old CBA — agreed.  (NPR report on March 7, 2011)

These negotiations will be in the ongoing during this week. It is still to be seen if, and what kind of, agreement will be reached by Friday.

What are your thoughts on this negotiation? Which side must make concessions? What type of concessions?

This week, China’s president Hu Jintao has been meeting with President Obama in Washington. The Chinese-US relationship has become increasingly important for both economies, yet there was opposition to the visit. Some oppose China’s stance on human rights and others are concerned about China’s monetary policy, which artificially inflates the value of the yuan. The political and economic opposition puts pressure on both sides, making it harder to negotiate.

In Huffington Post, Blythe McGarvie argues in the article “President Hu and Negotiations” that to better understand the Chinese position, it is important to know the “Beijing Consensus.” She writes:

“Joshua Cooper Ramo coined the term “Beijing Consensus” in 2004 in his 60-page Foreign Policy Centre article as he described China’s approach to new development. He states, “it is defined by a ruthless willingness to innovate and experiment, by a lively defense of national borders and interests, and by the increasingly thoughtful accumulation of tools of asymmetric power projection.” The Consensus addresses both the global balance of power and domestic issues such as quality of life and social and economic change.”

The Beijing Consensus has three main theorems:

1. “Chinese leaders who want to keep options open and preserve flexibility …. The only true path to success is one that is dynamic and responsive; no single plan works for every situation.”

2. “…Chinese behavior “demands a development model where [sic] sustainability and equality become first considerations, not luxuries.”

3. “China’s leaders want a peaceful rise by using economic leverage to keep the U.S. in check and assure China’s own financial sovereignty.”

Cultural differences also matter, as we have discussed previously on Negotiation Space. Matthew Edwards provides some more points to consider in the blog post “Negotiation skills when doing business in China,” published in Flying Solo. Two important points are that the Chinese don’t like to say no, which leads to different outcomes that what seemed to be agreed upon.

Today marks the 50^th anniversary of John F. Kennedy’s inauguration as president of the United Sates. In honor of the occasion, the JFK library in Boston has made available, in digital format, many letters, writings and movies from its archives.

When Kennedy took office on January 20, 1961, the world was in the midst of the Cold War. Two superpowers—the United States and the Soviet Union–were dealing with each other based on what politicians deem “mutually assured destruction.” Fears of nuclear war were very real and dictated the course of foreign policy for both countries.  Yet, in his inaugural address to the country, Kennedy talked about negotiation. This is what he said:

“So let us begin anew—remembering on both sides that civility is not a sign of weakness, and sincerity is always subject to proof. Let us never negotiate out of fear. But let us never fear to negotiate.

Let both sides explore what problems unite us instead of belaboring those problems which divide us.

Let both sides, for the first time, formulate serious and precise proposals for the inspection and control of arms—and bring the absolute power to destroy other nations under the absolute control of all nations.”

Kennedy summarized the win-win theory of negotiation masterfully. He advocated looking for common ground. He also thought that negotiations should be civil while still demanding assurances and proof from the other party.

On March 21, 1961, Kennedy wrote the following in a National Security Action Memorandum on the US-USSR Commercial Air Transportation Agreement:

“Prior to the initiation of the US-USSR negotiations on the draft agreement, I would like to have prepared for my approval a statement of objectives to be sought and the general principles to be followed in the negotiations. Such a statement would serve as a guide to the negotiators in responding to the Soviet counter proposals, as well as ensure that the negotiations are closely linked to our over-all relations with the USSR.”

Here Kennedy makes certain that negotiations have clear and stated objectives to serve a guide to the negotiators, and to make it easier to answer any counter moves.

You can access these and other documents at the John F. Kennedy library online: http://www.jfklibrary.org/

We come across lots of great resources and articles regarding all aspects of negotiation on the Web. Today we are sharing some insights from three sources.

Women and Negotiation

Joanne Cleaver discusses “Why Women Have Trouble Negotiating for More Money” on Bnet.com. Apparently, there are some cultural constraints at play. As Cleaver writes:

“It’s part of a cultural construct, according to Hannah Riley Bowles, an associate professor in management and decision making at the Harvard Kennedy School. In a not-yet-published study, Bowles asked people what they thought of the efforts of “employees” trying to win raises. When the employees were men, the people supported the workers’ rationales for more pay. But if the employees were women? Not only were the respondents less inclined to grant the women workers what they asked for, but they also didn’t like the women very much.

“Society expects women to be strong advocates for other people, but it’s more ’socially costly’ for women to advocate for themselves,” says Bowles.”

Cleaver goes on to explain how women can overcome these constraints.

Selling a Business Means Having a Plan B Negotiation Strategy

Also on Bnet.com, John Warrillow writes “Ready to Sell Your Business? Avoid These 8 Mistakes.” Mistake number eight has to do with negotiation. Warrillow says the following:

“Professional negotiators suggest having a best alternative to a negotiated agreement (BATNA) — that is, a plan B in case negotiations to sell your business stall. For example, if you’re planning to sell your business to a strategic buyer, also have a financial buyer keen to make an offer or a management team with the means to buy your business over time. That way, you’ll have more leverage when negotiations get dicey.”

Don’t Mix Religion and Negotiation

Finally, can we learn about negotiation from a football player? Apparently, we can, according to Kevin of the Saturday Down South blog, who writes “How to Conduct Business Like Cecil Newton.” Cecil Newton, whose son Cam Newton, plays for Auburn State, believes that:

“Compartmentalization is the key to successful business negotiations.  Religious values or roles are irrelevant on specific business dealings.  Seal the deal now, explain compromising behavior later.  Business is business.”

Read other business tips from Cecil Newton.

They say that all is fair in love and war, but does that mean all is fair in a business negotiation?

Back in March, here on Negotiation Space we discussed the negotiations between Cablevision and the Disney Company. At issue were fees that Cablevision charged subscribers. At stake was the transmission of the Academy Awards (Oscars), and many Cablevision subscribers were highly upset.

A similar dispute is going on between Cablevision and News Corporation (owner of the Fox Network), and many New York area Cablevision subscribers may not be able to watch the upcoming World Series between the Texas Rangers and the San Francisco Giants that is set to be broadcast on Fox starting on Wednesday. In fact, subscribers in the New York area were not able to see how the New York Yankees lost to the Rangers or how the Giants beat the Phillies since the channel has been blacked out for a week.

The pressure is high for resolution because many baseball fans are either going to have to switch from Cablevision to another provider, get an antenna or visit someone who has access to Fox. In other words, both parties in this dispute are using the discomfort of cable subscribers to create pressure on each other.  The New York Times has a report here.

The Federal Communication Commission is stepping in. The Washington Post reports the following:

The Federal Communications Commission on Friday has asked Fox and Cablevision to prove that they are playing fair in their negotiations over retransmission fees.

In a letters to News Corp. deputy chairman, Chase Carey, and Cablevision CEO James Dolan, the agency asked the firms to prove that they are conducting their talks “in good faith” and “in an atmosphere of honesty, purpose and clarity of process.”

Read more here:

What are your thoughts? Is using every means possible to create leverage “fair” in a business negotiation?

Selena Rezvani, who is the author of The Next Generation of Women Leaders: What You Need to Lead But Won’t Learn in Business School, was leading a workshop for women about negotiation skills. She took an informal survey of the room and asked how many women had negotiated/countered their last salary offer. Only about 10% had. Granted, this is not a scientific poll, but Rezvani says that:

“In fact women initiate negotiations four times less often than their male counterparts. Women also report “a great deal of apprehension” about negotiation–at a rate 2.5 times more than men, according to the research of Carnegie Mellon’s Linda Babcock and Sara Laschever.”

The research, and Rezvani’s anecdotal evidence, seems to indicate that women do have trouble with negotiation. But is this true? And if so, why is it so? Perhaps it is because women tend to be consensus-builders and perhaps don’t adapt to the perception of negotiation as adversarial.

Rezvani shared her ideas in the post “Why do women hate negotiating” as part of the On Leadership series on The Washington Post.

Women that make it to the top also challenge long-standing beliefs in order to get themselves to the negotiating table. They push back on the “good girl”-isms with which they grew up. They didn’t buy into: “Be seen and not heard,” “Always be nice” or “Don’t be too outspoken.” On the contrary, to survive in a top role, they ask for what they want. They’re firm. They don’t accept what’s unacceptable.
(…)

It’s a different negotiation mindset that can help us get over the hump. As someone that once pictured negotiation negatively (think bloody bullfight), I have come to pare it down to one excruciatingly simple act: a conversation that ends in agreement.

Dr. Chester L. Karrass would agree with this last idea—that negotiation should be viewed differently, and not as an adversarial I win-you lose situation:

“One intriguing question I have been asked is whether men are better negotiators than women. It’s a hard one to answer. All other things being equal the best negotiator will be the person who prepares well, has a good understanding of the issues at stake, is knowledgeable about the process of negotiation, including the strategies and tactic available to him or her, and is able to move the negotiation toward a both-win agreement.” (The Negotiating Game, p. 217)

You thoughts? Do women have trouble with negotiation?