Negotiation Space

Having a strong power position during a business negotiation is crucial. Power provides leverage, yet power is often about perception. At times, if you have a high status, the other party may ascribe more power to you.

Dr. Chester L. Karrass counsels that you should never reveal your total power too early, and advises instead to develop your power position slowly to allow the other party time for opinion change.

There are different ways to show your power, and also to gain power. Perhaps they are tied to your power style. According to Maggie Craddock writing in the Harvard Business Review blog, your power style may have developed in childhood. She found four power types. These are:

1. The pleaser: tries to connect with the other party on a personal level
2. The charmer: tries to manipulate relationships using charm
3. The commander: is strict and results-oriented
4. The inspirer: Uses creative thinking to inspire action from the other party

Craddock reminds us that:

As you identify your own power style, it’s important to bear in mind that there are no “good” or “bad” power styles, and remember not to make snap judgments about others or about yourself. Most of us employ more than one power style, and you may even switch styles depending upon the situation.

There may be other ways to typify power styles and types. Whatever your style, Dr. Karrass recommends you never underestimate the amount of power you have during a negotiation. If the other party is at the table with you, he/she believes you have the power to negotiate.

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?

Merriam-Webster defines perfectionism as: “A tendency to set rigid high standards of personal performance.”

According to Mosby’s Medical Dictionary, perfectionism is “a subjective state in which a person pursues an extremely high standard of performance and, in many cases, demands the same standards of others. Failure to attain the goals may lead to feelings of defeat and other adverse psychological consequences.”

Both definitions point to some problems with perfectionism: rigidity, extremely high standards, and when goals are not achieved, feelings of failure.

Perfectionism in business negotiations could be manifested as setting unattainable goals, looking for the perfect deal or agreement, demanding complete adherence to certain standards. Perfectionism cannot accept alternative solutions because only one solution is perfect. In other words, perfection in business negotiations may be unachievable, and even detrimental. Perfectionism may also be the enemy to win-win negotiation.

Can you recover from perfectionism and change your ways? The first thing you have to do is admit that your perfectionism may be a problem.

On Bnet.com, Penelope Trunk wrote “Perfectionism is a Disease. Here’s How to Beat It.” One of her suggestions is “allow yourself to be wrong in front of others.”

On the Harvard Business Review blog, author Peter Bregman says that if you want to be happier at work, you should avoid perfectionism, and he tells you how in the article “How to Escape Perfectionism.”

Bregman observes:

“Perfectionists have a hard time starting things and an even harder time finishing them. At the beginning, it’s they who aren’t ready. At the end, it’s their product that’s not. …

But the world doesn’t reward perfection. It rewards productivity. And productivity can only be achieved through imperfection. Make a decision. Follow through. Learn from the outcome. Repeat over and over and over again. It’s the scientific method of trial and error.”

Are you a perfectionist? Have you found it helps or hinders your ability to negotiate effectively?

Former South Africa President Nelson Mandela, now 92 years old, has just published a book, Conversations with Myself, based on the hundreds of notes, letters and other documents that he wrote during his life and especially during his 27 years in prison. Bob Simon profiled the book and the man on Sixty Minutes last night. You can read the transcript and watch video here.

While Mandela was in prison, he developed a strategy that would later help him defeat apartheid and win the presidency of South Africa.  Bob Simon reports the following:

“Reveal nothing: that was Mandela’s strategy. And organize the prisoners into a government in waiting. He never doubted that the racist regime would be overthrown. So even back then, he started preparing. First move: learn the language of the oppressor, Afrikaans.”

Mandela was moved from the Robben Island prison to virtual isolation on the mainland:

“This was the key moment for me in Nelson Mandela’s life. This was when he was most at risk, because he starts negotiating from prison on his own. He’s incredibly vulnerable,” Verne Harris explained.

Asked what could have happened to him, Harris said, “He could have been played into making concessions. He could have been played into compromising himself in ways that would have been irredeemable. And he didn’t make one mistake.”

A master negotiator, Mandela achieved his life goal of ending apartheid in South Africa and improving the lives of black South Africans. Some of the negotiating lessons we glean from this report are:

• Speak the language of the other party
• Keep your cards very close to the vest
• Do not doubt your chance at success
• Be prepared
• Project confidence
• Do not be coerced into making unnecessary compromises and/or concessions

When Mandela finally won the presidency of South Africa in 1994, Simon says:

“He ruled with the exact same strategy he had employed as a prisoner: don’t go for revenge, go for reconciliation.”

In the book Give and Take by Chester L. Karrass, there is a 61-question quiz for you to rate yourself as a negotiator. We’ve adapted this quiz to a ten-question format. The highest score is 100. The closer you are to 100 the better you are at negotiation.

How prepared are you when going to negotiation?
a) Very prepared
b) Somewhat prepared
c) I play it by ear

Do you believe what the other party says in a negotiation?
a) No, I am very skeptical
b) I believe some of what they say
c) I believe everything

How do you look at negotiation?
a) Mostly competitive but a good part cooperative
b) About half cooperative and half competitive
c) Highly competitive

Are you a good listener?
a) Very good
b) Average
c) Poor listener

Do you like to use experts in a negotiation?
a) Very much
b) Occasionally
c) Rarely

Do you think clearly under pressure?
a) Yes
b) About average
c) No

Do you get respect from others?
a) Yes, most of the time
b) Occasionally
c) Not usually

How important do you consider integrity in yourself and in others?
a) Highly important
b) Moderately important
c) Every person has to care for himself/herself

Are you sensitive to body language?
a) Yes, very sensitive
b) Moderately sensitive
c) What is body language?

Are you patient?
a) Yes, always
b) Average
c) I want to get to the bottom of things quickly

Scoring:
For every A answer, give yourself 10 points.
For every B answer, give yourself 5 points.
For every C answer, give yourself 0 points.

How did you score?

According to the latest Pew Research numbers, more than half (54%) of Americans believe that the United States is still in recession. (You can read more about the survey here: http://pewresearch.org/databank/dailynumber/?NumberID=1054 ).

The latest move by the Federal Reserve and the high unemployment numbers seem to back up this viewpoint.

Does the sluggish economy affect business negotiations? Some argue that it does. In a 2008 Harvard Business Review article “Negotiation Strategies for a Downturn,” Danny Ertel and Mark Gordon say that the downturn can affect both the quality and the quantity of deals. They write:

“During a downturn, things change. As the frenzied pace of a frothy market slows, there are fewer opportunities, and every deal matters. This tends to make sales and business development negotiators more desperate and anxious to close deals and hit their numbers. Those on the other side know this and take advantage of their new leverage. Negotiations become more difficult, and pressure on the deal makers to deliver increases. In a downturn, there will be fewer deals, so each must be done more carefully to ensure it actually delivers value.”

The authors caution that in a bad economy, negotiators can fall into bad deals, because parties cannot honor their commitments or over promise in desperation to get the deal done.

(Read the article here: http://www.businessweek.com/managing/content/apr2008/ca20080422_046639.htm )

Certainly the tough economy means negotiators are working harder to reach good deals. The era of excess is over for now. New deals probably don’t have a lot of added bonuses, but concentrate on the bottom line, and on value.

Dr. Chester L. Karrass advises that worth analysis is more important than cost analysis. In determining the value of something, you can assess the risk you are willing to take to get there. Value becomes more important when dollars are tight.

Have you found that the current economy has changed the way you negotiate? Please share your thoughts in the comments.

Each negotiator’s personality, skills, beliefs and role combine to form a negotiating style. There are various negotiating styles but there are three main types:

• Collaborative: Negotiating to achieve a win-win solution
• Competitive: Negotiating to achieve a win-lose solution
• Balanced: Negotiating somewhere in between collaborative and competitive

The type of negotiations a negotiator engages in also determines negotiating style. For instance, a diplomat generally has to be very careful while an industrial relations negotiator may be more confrontational.
(There’s a list of negotiating styles here: http://changingminds.org/disciplines/negotiation/styles/styles.ht _

Your negotiating style can affect the outcome of your negotiation. If you are in a client/customer centric business, you may need to modify your negotiation style to better match your clients. According to Stuart Sanders, writing in his blog New Directions for Agency Growth:

“Many times, great clients are lost due to blunders in negotiating. But there are negotiating tools and techniques that can help you land prize clients. Or keep key clients longer.”

Sanders goes on to say:

“One of the first steps in successful negotiations is assessing your client’s style or profile accurately, and responding to their negotiating style in the way best suited to them. There are four client profiles, based on how they work and respond, whether they are more task oriented or people oriented, and whether they are high or low assertive.”

Read the post here: http://sandersconsulting.com/newbusinesshawk/bid/49738/New-Business-Client-Service-Keys-to-Successful-Negotiation

Do you know what your negotiating style is? You can take a quick 10-question quiz from the Ediburgh Business School here: http://www.ebsglobal.net/programmes/negotiation-quiz

Have you found you have a set negotiation style or do you vary it based on the situation? Tell us your experiences in the comments.

Types of negotiators and their skills

Being in business requires negotiation skills. A few days ago here on Negotiating Space, we discussed the types of negotiating skills you need to start a business. Perhaps we could call those entrepreneurial negotiation skills.

In his book The Negotiating Game, Dr. Chester L. Karrass writes that the most important in skills in negotiation are the following:

• Planning
• Thinking clearly under stress
• General practical intelligence
• Verbal ability
• Product knowledge
• Personal integrity
• Ability to perceive and use power

According to the article “Top Negotiation Skills for Entrepreneurs” from the GoForth Institute, those skills, plus organization skills are crucial for entrepreneurs. Read the article here:

http://canadianentrepreneurtraining.com/top-negotiation-skills-for-entrepreneurs/

Here are some other skills that play a part in negotiation:
• Reliability
• Initiative
• Persistence
• Risk-taking
• Courage
• Team leadership
• Patience
• Ability to develop rapport
• Tact
• Open-mindedness

Arguably, entrepreneurs need the full range of negotiating skills, since they are involved in many aspects of business (sales, employee relations, contracts, etc.). The skills needed for specific negotiations may be more focused, or may place more emphasis on one of these areas. For instance, If you are involved in sales negotiations, it is crucial to have product knowledge. You may also need research skills to be able to know and assess the competition.

Dr. Chester L. Karrass makes distinctions amongst different negotiators He writes that industrial negotiators (engineers, program managers) “placed greater emphasis on objectives, ability to exploit power, willingness to take risks and the need for discretion.” He then says that commercial negotiators (attorneys, real estate brokers, retail buyers) “placed greater emphasis on analytical ability, self esteem and patience.”

Do you focus your attention on developing specific skills to your area? If so, which skills do you find most usefu

Net Neutrality
Net neutrality has been a big issue in the telecommunications world for a few years. According to Wikipedia, net neutrality is the principle that all Internet traffic should be treated equally, with no restrictions by Internet providers, governments or other entities on the content.

Proponents of net neutrality include many software and Internet companies, chief among them Google. Opposing net neutrality are the cable and telecommunications industry and some hardware companies.

The Federal Communications Commission (FCC) has been involved in negotiations to achieve a compromise over net neutrality since June. The FCC was advocating a “third way,” which FCC Chairman Julius Genachowski said would:

1) Place federal policy on a sound legal foundation
2) Narrow the approach to only the transmission component of broadband access
3) Restore the status quo
4) Establish boundaries to regulatory overreach
5) Use a similar approach as to wireless communications

Read the complete Third Way solution here:
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-297944A1.pdf

The closed-door negotiations were being held with four of the largest Web firms (Google, Verizon, Skype, and AT&T). The Washington Post reported the following:

“Thwarted in his campaign to set government control over consumer access to the Internet, Federal Communications Commission Chairman Julius Genachowski has been trying to salvage his efforts by negotiating directly with a handful of the biggest Web firms and network service providers.

His goal is for those firms to put aside their differences on how Internet service providers control content on their networks and agree on legislation that Genachowski can present to Congress.” Complete Washington Post article here:

http://voices.washingtonpost.com/posttech/2010/08/fcc_draws_fire_over_closed-doo.html

Meanwhile, Google and Verizon were involved in private negotiations, and the parties have reached an agreement on Wednesday on how network operators can manage Web traffic. The deal has not been officially reported. (Complete Washington Post story here:

http://voices.washingtonpost.com/posttech/2010/08/google_and_verizon_have_come.html )

On Thursday, the FCC called off its negotiations, saying that they have not produced results.
According to Tony Bradley of PC World, the negotiations were called off because:

“Reports of a secret deal between Verizon and Google for preferential treatment of Google traffic on Verizon’s networks may have been a catalyst to the breakdown of negotiations.”

(Read two PC World articles about FCC net neutrality negotiations here:
http://www.pcworld.com/article/202694/fcc_calls_off_net_neutrality_negotiations.html?tk=hp_new
http://www.pcworld.com/businesscenter/article/202726/end_of_net_neutrality_negotiations_good_news_for_internet.html?tk=hp_blg )

It remains uncertain what the future is for net neutrality negotiations.

Airline mergers are nothing new. In just the last few years, US Airways merged with AmericaWest and Delta merged with Northwest.

A few weeks ago it was reported that US Airways was in merger talks with United, and then with Continental. Those talks fell through, and over the weekend news came that United is merging with Continental to form the largest airline in the world. The deal is worth $3.2 billion, according to CNN. The new consolidated airline would fly under the United name and would be based out of Chicago.

The negotiations between Continental and United didn’t appear to take much time, indicating that Continental was ready to merge.

United approached the merger with financial leverage.

United had previously approached Continental in 2008, but Continental backed out. CNN reports that this time United was in a better financial position, giving it more leverage:

Thanks to an improved financial performance, United was expected to have more weight in the talks. Last weekend, the company pushed to base the deal on the closing price of its shares the day before an agreement is signed.

Read the CNN article here.

Airline mergers must be approved by the government

However, just because the Continental and United negotiators agreed to the merge under an all-stock deal, the deal has to be approved by the United States Justice Department Anti-Trust Division. The New York Times reports that due to Washington’s increased interest in regulation, the review could take several months if it is even approved. Additionally, employee unions must also agree to the merger.

Read the New York Times article about the negotiations here.

What do you make of this seemingly fast airline merger? What will happen to US Airways and American Airlines?