Negotiation Space

We spend a lot of time here at Negotiation Space talking about what you should say during a business negotiation and when you should say it. Perhaps we should also discuss what you should not say.

Don’t let emotions get the best of you!

Your first rule is to avoid saying anything when your emotions are getting the best of you. With any strong emotion—anger, sadness, even happiness—people tend to become less rational. Some people even lose touch with reality or the situation at hand. During a business negotiation, take a time out if you get emotional so that you can avoid saying anything “in the heat of the moment.”

Don’t make strong assertions if you aren’t sure

Dr. Chester L. Karrass also advises that you avoid making strong assertions, unless you are 110% sure of you are stating. If you have any doubt, he suggests saying “I reckon” instead.

5 Statements to Avoid

Inc. Magazine has suggestions for “5 Things You Should Never Say While Negotiating.” Author Mike Hofman writes that you should never say the following:

• The word “between” (or throw out a range)
• “I think we’re close.”
• “Why don’t you throw out a number.”
• “I’m the final decision-maker.”
• Obscenities.

What have you learned is best never to say while negotiating? Share with us in the comments.

“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/

A year ago on Negotiation Space, we discussed how civility can save your negotiation. It is worth revisiting this now as the country marks Dr. Martin Luther King’s birthday on Monday, January 17 and also deals with the aftermath of the horrible tragedy in Tucson, Arizona.

It is hard to escape the calls for increased civility in political discourse. Although in the case of the Tucson shooting it is not clear that political rhetoric led the shooter to execute his rampage, it is easy to see how angry, heated exchanges can lead to violence. In terms of the civil rights movement, Dr. King advocated for civil disobedience—using quiet resistance instead of violence.

The issue for business negotiations is that attacking and creating an “us-versus-them” dynamic does not lead to agreement. Any negotiation starts with the premise that the parties are seeking to reach agreement. Insulting the other party is not going to result in compromise and finding common ground.

Dr. Chester Karrass writes:

“There are people who try to get what they want by becoming emotional, by embarrassing the other person or becoming a nuisance. Most of us become defensive when we encounter such behavior. We are not prepared for people in business to display emotions or act in an embarrassing way.”

Dr. Karrass goes on to say that people who act this way in a negotiation are using an intimidation tactic designed to make you less assertive in supporting your position.

To deal with incivility, you first must recognize that if the other party is being rude or otherwise unpleasant, it may be a negotiation tactic to put you on the defensive. Take the higher ground, but also stand your ground.

How do you deal with incivility in a business negotiation?

You’ve probably heard that getting through life is more like running a marathon than a sprint. That is because to succeed in a marathon you need endurance more than speed.

Marathon negotiations require endurance and focus and they often produce agreement. These types of long–usually overnight –negotiations, are seen often in diplomacy, international trade talks and in union-management bargaining.

Why are marathon negotiations so successful?

• The more time you spend with the other party, the better you will get to know each other.
• It isolates the parties at the table from their larger organizations, creating an “us versus them” dynamic.
• Repeating an argument many times makes both sides tired of it and more likely to want to compromise.
• Working on something so long makes the parties want to succeed (that is, to reach agreement)

Marathon sessions are more likely to be successful if you have very defined goals. It also may be that more highly charged issues benefit the most from the marathon treatment

However, as we said before, marathons are all about endurance. If you don’t have the stamina to hammer out an agreement over a very long stretch of time, you may actually be the party that buckles in or you may force a deadlock.

Most negotiators would probably prefer shorter sessions. Many would opt to have breaks and time-outs if the negotiations draw long.

In the end, it will depend on what is being discussed and who is discussing it to determine whether a marathon session will bring about agreement.

You may find that your business negotiation skills are useful to resolve issues in your personal life. Think about all the times where there is conflict or disagreement in your life. Can you apply business negotiation strategies and tactics to reach agreement, and thus, family harmony?

Dr. Chester L. Karrass devotes a chapter of his book The Negotiating Game to personal and family negotiations. The chapter, entitled “Love, Honor and Negotiate” discusses issues in family life, specifically marriage, that affect negotiations between family members, such as power in the relationship and money differences.

Dr. Karrass writes: “In my opinion the same forces that determine the outcome of any negotiation govern marriage. Power and bargaining skill play as important a role as they do in business.”

The most important negotiating skill to apply to personal negotiations is to think win-win. How can you reach an agreement that suits both people in the relationship? Fighting in a relationship assumes a win-lose mentality, and that inherently does not result in harmony.

Marty Latz writes that he applies negotiation skills to his family relationships in the article “Negotiation strategies for families,” published in the Arizona Republic newspaper. He specifies the following negotiation skills:

• Listening
• Looking for hidden agendas
• Thinking of the long term relationships

What specific negotiation strategies and tactics have you used in your personal life? What works the best with your children? What works better with your spouse?

For both buyers and sellers, understanding pricing is crucial. Buyers want to know as much as possible about the price whereas sellers usually want to keep the details to themselves. How does a negotiator get around the secretive nature of pricing?

For buyers:

Are you a buyer trying to understand the seller’s pricing structure? It is important to get your exact cost breakdowns—in many cases so you can compare pricing with other vendors. Often, sellers will resist giving you this information, unless you can convince them that cost breakdowns will help their long-range interests.

There are several ways to convince the seller to provide you with the price breakdown:

1. Make the case that—due to policy and legal regulations–you cannot deal with sellers who don’t provide breakdowns.
2. Delay giving your order until you get the price breakdown.
3. Tie this purchase to future sales.
4. Leverage the competition: tell the seller they are providing the breakdowns.
5. If all else fails, protest to a higher authority.

For sellers:

Pricing is something most sellers try to keep close to the vest. Revealing too much could be troublesome and create a loss of negotiating power. If you are a seller trying to avoid providing a price breakdown, following are few tactics you could use:

1. Your company policy prohibits it
2. Detailed information is not available
3. Providing breakdowns is a large expense, due to the detailed nature of the work
4. Cost breakdowns involve proprietary information
5. If all else fails, keep saying no.

How do you deal with pricing issues? Please share your tactics (both as a seller and as a buyer) in the comments.

Looking to make a sale before the end of the year? Time is running out! If you are a seller during this busy time (or any time of the year) you must strategize and plan for negotiations.

First, you want to have some bargaining leverage.  To obtain the leverage you need, you need to learn how the buyer feels about the product or service you are selling. The more insight and knowledge you have about the buyer, the better position you will be in.

Prior to entering the negotiation, Dr. Chester L. Karrass recommends that sellers probe for the answers to six essential questions. These are:

1. What are the buyer’s specific objections to the product or service?
2. What does or doesn’t the buyer like about the seller’s competition?
3. Which benefits of the seller’s product/service are the most important to the buyer?
4. Does the buyer believe the seller’s product statements?
5. What is the buyer’s attitude or feeling about the seller and his product or service?
6. Are there indications that buyer wants to close?

Second, as a seller you must understand that you have an important source of power in the negotiation: your extensive power of knowledge about your product/service. The buyer will likely never have the inside information that you have.

Third, sellers should know their competition. A thorough knowledge of the market and its key players is important to remain competitive. If someone is offering the same product for less, you need to know why and you should have a reason to offer the buyer for why your price is different.

What do you do to prepare for a sale?

Most negotiators enter a negotiation with the desire of achieving their set goals. Stated negotiation goals are usually very well defined and measurable (e.g. obtain discounted delivery for a year; become exclusive dealer). However, is achieving the goals or getting the deal enough motivation?

You may have been following the United Nations climate change talks in Cancun this past week. Apparently, very little was accomplished. In his article “Climate Talks Might Need a Profit Motive” in the New York Times, author Gerard Wynn argues that getting businesses involved (and making it profitable to go green) may be key in moving the negotiations forward. Wynn writes:

“Clean-technology profits could illustrate the opportunities from a global climate deal and persuade negotiators from China and the United States, the world’s top two emitters of heat-trapping gases, to cooperate.”

Is profit really the only motivation in a negotiation? Not according to Dr. Chester L. Karrass, who provides a long list of motivators in his book Give and Take. Among them are:

• Feeling good about yourself
• Avoiding future risks or troubles
• Obtaining recognition
• Getting promoted
• Wanting to keep your job
• Wanting to feel like what you do matters
• Wanting to be listened to
• Being liked
• Affecting perceptions

As you can see from this list, feelings and emotions can play a large part in motivation. The bottom line is that motivation is very complex and varies from person to person. Some people are motivated by emotional needs and others are more motivated by making money.

What is your motivation when you are negotiating?