Negotiation Space

Not all business negotiations take place between peers. There is often some sort of difference or inequality—perhaps hierarchical, perhaps cultural. Navigating those differences skillfully will result in better business negotiations and agreements.

The first step in navigating differences is to acknowledge they exist. Once you realize that the person across the table is different from you, you can work on recognizing what the differences are.

Culture is a huge differentiator among negotiators. The culture and country of origin can have extensive influence upon your negotiating style and expectations (both of yourself and others at the table). Culture can influence your ability to take risks, to speak your mind, and how you perceive behavior. For instance, some cultures express differences by speaking loudly, and for some, speaking loudly means you are being rude.

Lothar Katz has written a book called Negotiating International Business – The Negotiator’s Reference Guide to 50 Countries Around the World where he outlines how different countries and cultures deal with negotiation.

Are you negotiating in Denmark? Read “Negotiating with Danes: How to Catch the Curveballs.” You will have to be aware that Danish business culture is flatter than the American one, with less hierarchy and more openness.  The article in the Copenhagen Post online says:

author Lothar Katz characterises Danes as “moderate risk takers” who shun “aggressive tactics” in negotiations and absolutely hate to haggle.

“Since the Danes believe in the concept of win-win, they expect you to reciprocate their respect and trust,” Katz writes.
In contrast, in some countries, such as Spain, negotiations tend to be seen as win-lose situations, where the winner takes all, and that can lead to more aggressive and confrontational tactics.

Clearly, the more you understand about the culture of the person across the table, the better position you will be in to negotiate an agreement that satisfies both parties.

Salary negotiations are one type of negotiation most working people will enter several times in their lives. At some point, you will want to negotiate a raise or a starting salary or even a multi-year contract.

Salary negotiations are a fine example of the importance of power in a negotiation. When you are asking for a raise, the power may rest with your boss instead of you. How can you help distribute the power more equally?

In an article on the Harvard Business Review blogs, “Negotiate Where You Want to Get What you Want”, Markus Baer and Graham Brown argue that location is a very important factor in salary negotiations. One place where you will be at a disadvantage is in your boss’ office. According to their research:

…residents of an office space — even after only 20 minutes of residing in a space — were able to claim as much as 160% more value in a distributive (”You win, I lose”) negotiation than the visiting party. And it is not only that residents do better when negotiating on their turf. Our study also revealed that entering someone else’s office space causes us to do worse.

Clearly, to do better in salary negotiation you have to take the discussion out from the office to a more neutral spot—perhaps the conference room or a coffee shop. If this is impossible, then you will have to work on increasing your power and confidence. To do that, research as much as you can about salaries in your field, and be prepared to back up your claims.

What do you suggest to people negotiating for a higher salary?

Here at Negotiation Space we aim to give you tips and techniques that will help improve your business negotiations. There may be a way to improve your ability to sell (and also to persuade) by  improving the synergy you are creating with the other party.

Online, Inc. Magazine provides a few tips in the article “ How to Communicate to Sell” by Marla Tabaka. Tabaka says:

An effective sale is most often achieved between two (or more) people who have synergy between them and understand the desired outcome for, not just one, but both parties. No matter what business you are in, you sell. You sell yourself, your product and/or your vision. And to do so with great success depends on your skill in creating synergy between you and your prospects, potential investors, partners and employees.

To create synergy, Tabaka recommends several steps:

1. Observe the other party’s body language, tone and speech patterns.
2. Put the other party at ease.
3. Create connection by mirroring body language.
4. Have the intention of creating a meaningful connection with the other party

By creating synergy, you are creating connection and perhaps a shared goal of achieving a deal that is good for both parties.

What are your tips to create synergy?

Business negotiations are similar to poker games in that you don’t reveal all your cards to the other party (player).  But, there is a vast difference between not revealing information and willfully providing the wrong information.

One move—bluffing—is ethical and the other move—lying—can be unethical.  Dr. Chester Karrass says the following: “Discretion in making claims and statements should not be confused with misrepresentation.”

You should not allow your side or the other party’s side to engage in lying. Dr. Karrass recommends the following policies:

• Never condone lawbreaking, lying or gross misrepresentation.
• Make your team sensitive to the important of avoiding the above.
• Only hire ethical people for your team.

Harvard University’s Program on Negotiation tells you how to “Defend yourself against deception.”

The advice is the following:

you will sometimes encounter negotiators who feel comfortable lying to you. To reduce the likelihood that you’ll face deceptive tactics, try prefacing important negotiations with a discussion of ethics. Tell your counterpart that you intend to behave as fairly and truthfully as possible, and ask him to do the same. When you do catch someone in a relatively minor lie, consider discussing the matter directly to see whether you feel comfortable moving forward. If the lie is significant and trust seems beyond repair, walking away may be the best choice.

How do you deal with lying during a business negotiation?

Negotiation Space always monitors interesting and insightful articles and posts regarding business negotiations. Today we found three useful articles that we want to share.

On MSN.com we get “The Most Common Negotiating Mistakes—and How to Avoid Them.” The article lists several mistakes that are easily avoided (and many that we have discussed here on Negotiation Space). Here are three:

• Being too pushy: allow people to say no.
• Sending subconscious messages: Body language is part of communication, and you need to aware that others may be able to read your thoughts.
• Thinking short-term: Many negotiations take place in the context of long-term relationships. It is wise to think about the long-term impact instead of short-term gain.

Being able to be persuasive is an important part of a negotiator’s skill set. Over on the Harvard Business Review, William Ellet , a lecturer at Harvard, writes about “The Practical Art of Persuasion”. Ellet teaches a course on persuasion, and he says there are several steps to take to develop a persuasive argument. First is understanding who your audience is. Second, is creating the right argument. He suggests the following questions to formulate your argument:

What are the best arguments I can make to achieve my purpose?

Do I need to include arguments that will appeal to different segments of the audience?

What evidence do I need to support my arguments? How much do I need?

Harvard Business School Program on Negotiation discusses the hardest step of all in business negotiation: “How to Get to the Table.” Many times, because of lack of trust, the parties are unable to sit down and talk to each other. The article says:

When outside facilitators or brokers aren’t available or appropriate, stakeholders can get to the table by underplaying the significance of the negotiation. Talks can be termed “exploratory” or “informational”; contentious issues can temporarily or permanently be taken off the table. When emotions run high, getting new faces involved may break the deadlock.

If you come across a great negotiating story, feel free to share in the comments.

Almost every negotiator has to present his or her offer. It could be argued that the better your presentation is, the better the outcome of the negotiation will be for you. How do you go about improving your presentation?

Use rhetorical flourish

According to a 2008 article in Business Week magazine, there are four ways you can improve your presentation, and they have to do with rhetoric. It is more about how you present the information than what the information is. Author Carmine Gallo recommends that you use these four rhetorical flourishes:

• Analogies
• Similes
• Metaphors
• Triads (delivering three concepts)

Use online software to jazz up your presentation

Some people use PowerPoint, others rely on paper handouts or even writing on a whiteboard. You may also consider online presentation software, which has lots of bells and whistles to give your presentation pizzazz.

Entrepreneur Maureen Carroll tells Inc. Magazine that her favorite online tool for presentations is Prezi. With Prezi, you can include text, graphics, videos and other items in your presentation, and zoom from thing to thing.

Mashable provides a list of thirteen online presentation applications that you can use as well.

Share your presentation online

There are several places online where you can share your presentation, in many cases for free. Wish some, you may be able to link them to your LinkedIn Profile or put on Facebook. Here are three websites to check out:

Slideshare: http://www.slideshare.net/

Sliderocket: http://www.sliderocket.com/

Slidebloom: http://www.slideboom.com/

What tips do you offer to improve presentation? Share in the comments.

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.

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.