Negotiation Space

One of the tenets behind a win-win negotiation is that all parties must be satisfied with the deal. It isn’t a win if someone feels he/she got the short end of stick, right?

In fact, Dr. Chester L. Karrass writes the following in his book “In Business as in Life, You Don’t Get What You Deserve, You Get What You Negotiate:”

The basic principle of win-win negotiating is that there is ALWAYS a bigger and better deal for both parties if they are willing to search for it. Both buyer and seller increase their PROFIT and SATISFACTION without hurting each other.

Maurice E. Schweitzer has an interesting take on satisfaction, in this article on the Harvard Law School Program on Negotiation website. He writes that satisfaction is important because this ensures that the parties will uphold their contractual negotiations more readily and also, that the other party will likely recommend you/refer business to you AND seek you out as a partner for future negotiations.

Clearly, satisfaction is a key component of a successful negotiation. How do you ensure it? Schweitzer writes that negotiators must manage expectations, both before and during a negotiation. There are ways of doing this. For instance, Schweitzer writes:

Your reaction to an opening offer can also influence your counterpart’s expectations. By reacting with a surprised look, a laugh, or a flinch, you can lower your counterpart’s expectations about the feasible bargaining zone. Conversely, by appearing very cooperative or particularly eager for agreement, you may raise your counterpart’s expectations.

Dr. Karrass also writes about expectations. He says:

Every demand, concession, threat, delay, piece of information, deadline, authority limit and question has an effect on people’s expectations.

Being able to  manage expectations is a necessary skill that  help you reach a satisfactory deal. What are your thoughts?

In honor of President’s Day, we have researched what various United States presidents thought about business, power, leadership and negotiations. Following we share some of these presidential insights.

George Washington:

Let your Discourse with Men of Business be Short and Comprehensive.
Few men have virtue to withstand the highest bidder.

Thomas Jefferson:

When angry count to ten before you speak. If very angry, count to one hundred.

Abraham Lincoln:

A house divided against itself cannot stand.

Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker the lawyer has superior opportunity of being a good man. There will still be business enough.

John Adams:

Because power corrupts, society’s demands for moral authority and character increase as the importance of the position increases.

Theodore Roosevelt:

It is hard to fail, but it is worse never to have tried to succeed.

The best executive is one who has sense enough to pick good people to do what he wants done, and self-restraint enough to keep from meddling with them while they do it.

Franklin D. Roosevelt:

Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off.

Dwight D. Eisenhower:

If the United Nations once admits that international disputes can be settled by using force, then we will have destroyed the foundation of the organization and our best hope of establishing a world order.

Leadership is the art of getting someone else to do something you want done because he wants to do it.

Ronald Reagan:
Peace is not absence of conflict, it is the ability to handle conflict by peaceful means.

Happy President’s Day!

If you have any great presidential quotes relating to business and negotiations please share in the comments.

Negotiations: How to Handle Objections

“Nothing will ever be attempted if all possible objections must first be overcome.” Samuel Jackson

There will always be objections—to your price, to your delivery, to your product or service, or maybe even to you. How you handle these objections will determine the success of your business negotiation.

The first step in handling objections is to try to understand the viewpoint. You don’t have to agree with the objection, but you must understand how the other party is thinking. Convey your understanding to the other party by re-phrasing the objection as a question. You can say something like “You think our delivery time is too slow?”

Handling objections also involves pre-negotiation preparation. For instance, if you are a seller, make a list of your product or service’s attributes, benefits and disadvantages. Do the same for your competitor’s product or service. Then, write down every conceivable objection to your product or service. Brainstorm with a group if possible. Come up with a list to counter these objections.

You will notice some objections are hard to handle and others are easy to handle. Easy-to-handle objections can always be refuted with available evidence (competitive pricing for example).

Other objections are harder to deal with. Dr. Chester L. Karrass suggests dealing with these by turning the objection into a yes-or-no question, and trying to elicit a “yes” answer. For instance, you can say something like “I see you are concerned with the price of this product. If you check our competition, you will notice that they don’t use the same material in producing the product, and you want this material if you want the product to have a 25-year life span, right?”

Dr. Karrass counsels that you should NEVER agree with the other party’s objection. In the example above, you would never agree point-black that the price is too high, instead you would only note that the other party thinks the price is too high.

What do you do to handle objections? What process do you follow?

“Time is free, but it’s priceless. You can’t own it, but you can use it. You can’t keep it, but you can spend it. Once you’ve lost it you can never get it back.”—Harvey MacKay

“The only reason for time is so that everything doesn’t happen at once.” –Albert Einstein

Time—how long or when—is a major factor in all negotiations. Some negotiators will say they did not have enough time to reach an agreement and some will say there was too much time.

How time is perceived may have to do with cultural background, and can affect a negotiation. In an article discussing time perceptions in Middle East peace negotiations, the following is worth noting:

“An article by Ilai Alon of Tel Aviv University and Jeanne Brett of Northwestern, however, cautions that good intentions alone may not bridge cultural differences. Specifically, they note that conflicting conceptions of time can thwart successful negotiation.”

According to Dr. Chester L. Karrass, time has power in a negotiation. Whichever party is constrained by time provides the other party with a source of strength.

Timing and schedules are crucial during a negotiation.  If you are on a tight schedule, or an internal deadline is looming, time can be a source of urgency. There are times of the year that are more beneficial to buyers than sellers (and vice versa). For instance, if it is the end of the month and a salesperson needs to meet a quota, he or she may be more willing to negotiate on price.

Dr. Karrass asserts that the timing of a final offer impacts its credibility—if you do it to early the other party may think you are bluffing.

“Time talks. It is the hidden language of negotiation.”—Chester L. Karrass

How does time affect your negotiations?

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/

Last week, for the first time ever, the Constitution of the United States was read out loud in the House of Representatives. The Constitution lists many political and civic rights available to U.S. citizens such as the rights to freedom of speech and of peaceful assembly.  However, the Constitution does not cover rights for negotiators. That is why Dr. Chester L. Karrass developed the Negotiator’s Bill of Rights, which consists of seven “amendments.”

In drawing up a “Bill of Rights,” Dr. Karrass seeks “to help negotiators feel more comfortable in situations that normally threaten their self-esteem and cause them to retreat rather than advance their viewpoint.”

As a negotiator, you have seven inalienable rights. These are:

1. You have a right not to understand
2. You have a right to be wrong
3. You have a right to be indecisive
4. You have a right to be repetitive
5. You have a right not to answer questions, and you have a right not to know the answer
6. You have a right to your own viewpoint, and to be somewhat irrational or emotional
7. You have a right not to be liked

Negotiating is hard work, and the “Bill of Rights” allows you to recognize that you are not perfect and that you will make mistakes, that not every one will like you or what you say, and that all of it is just fine. If you are too sensitive to every mistake that you make, you will quickly become defensive and that will put you in a weak position. It’s best to keep these imperfections in perspective and focus on the job at hand.

Will you adopt the Negotiator’s Bill of Rights?

Thanksgiving is celebrated by millions of Americans on the fourth Thursday of November. Although it is a holiday celebrating gratitude, Thanksgiving can be stressful as many negotiate crowded roads, airports and trains stations to get home. Many others negotiate with family once they arrive home.

Perhaps some negotiation skills will help you to better negotiate the holiday, and actually enjoy the time off.

Having patience: The most powerful tactic in negotiation, patience can achieve what other tactics can’t.

Listening: Instead of arguing, listen.

Splitting the difference: It’s a quick way to reach agreement.

Relieving tension: Tell a joke, take a break, do what you have to do to reduce any tension.

Conceding: Make small concessions to move forward.

And as Dr. Chester Karrass writes:

“Fine food and small favors can influence big decisions. Good food, a nice evening and small favors are not bribes…What they do for the salesperson is make the buyer more receptive to the sales message.”

Substitute yourself for the salesperson, your family for the buyer and a good time for the sales message, and you will have a very pleasant Thanksgiving holiday.

Happy Thanksgiving from Negotiating Space!

In business negotiations, you and the other party may have different views on various issues. However, you may also have much in common. Finding common ground is a great tactic to use in negotiation because it creates positive feelings and a sense of sharing, which could make reaching agreement easier.

In the world of education reform, former Washington, DC Schools Chancellor Michelle Rhee became nationally known for her views. In Washington, the public was divided on how she handled her job. While some Washingtonians thought she propelled much-needed reform forward, others believed she handled reforms and negotiations with those involved in a brusque and arrogant manner.

Rhee’s successor (at least in the interim) is Kaya Henderson, who had been the lead negotiator for contract talks with the Washington Teachers’ Union. The Washington Post reports the following:

“[Henderson} opened the discussions on an unlikely note. Instead of talking about salary schedules or work rules, she asked those at the bargaining table to talk about the student who had made the biggest impact on their careers.

‘The very beginning of the negotiation was a shared experience around the ability to change children’s lives,’ Henderson said.” (Washington Post, p. A16, October 14, 2010)

What Henderson did in her negotiations with the teachers’ union was to find common ground in the shared experience they all had in the classroom. She was able to bridge divisions by pointing out what everyone around the table had a common goal: the desire to impact students.

Have you tried to find common ground with the other party? If so, how did you do it?

Power in negotiations
When we talk about power in a negotiation, what do we mean? Dr. Chester L. Karrass defines power in a negotiation as the ability of a negotiator to influence the behavior of the other party. He also lists eight principles about power:

1. Power is relative.
2. Power can be real or apparent.
3. Power can be exerted without action if the other party believes that an action can take place.
4. Power is always limited.
5. Power exists to the extent that it is accepted.
6. Power does not separate the ends from the means.
7. Power entails cost and risk.
8. Power relationships change over time.

Dr. Karrass states that these eight power principles are applicable to most if not all negotiating situations, from the diplomatic to the simple sales transaction.

But apart from the principles of power, you may want to determine the sources of power. Power can be drawn from various situations.

• Legitimacy: We give power to those who have genuine authority through ownership, tradition, and laws.
• Knowledge: The control of information gives power. The more you know about your product, your market and the other party, the better your power situation.
• Commitment: The degree of loyalty and commitment to an organization or a situation determines how much power you have. For instance, if you are non-committal about your job, you may not get promoted.
• Negotiation skill: Your negotiating skills can be developed and honed. The better your negotiation skill set, the higher your power.

What we can take away from all this is that power can be increased or decreased—it is not stable, plus, it depends largely on perception.

Perhaps Alice Walker put it best: “The most common way people give up their power is by thinking they don’t have any.”