Tag archive: third-way
Cultural Bias in Negotiation
Willingness to take risk varies widely by culture. Where one culture may find it perfectly acceptable to ask for much more than they need (i.e. they leave a lot of room to negotiate), another culture reacts to this approach negatively (i.e. they are lying to us, we do not trust them). Some cultures are very individualistic, while other cultures are collective or group oriented. Some cultures prefer a direct negotiating style while others prefer an indirect approach (i.e. via intermediaries or third parties). In some cultures decisions are made by consensus so no single person has to take responsibility. A particular cultural approach may be defined by geography, nationality, or company. Cultures vary from organization to organization. It is important to know who you are dealing with and how they prefer to negotiate. International Negotiations Western negotiators (i.e. from Europe or North America) generally prefer an organized, point-by-point, issue-by-issue approach to their negotiations. Some Asian cultures (particularly China) take a more holistic approach to negotiation; often jumping from one issue to another totally unrelated issue; then back to change a point that everyone had already agreed to; and then off to another issue. This disorderly approach can confuse an uninformed Western style negotiator. It hinders their ability to keep track of where they are in the negotiation and often is perceived as simply a tactic to gain an advantage. In fact, this seemingly disorderly approach is generally purely culturally based. Cultural Bias Understand the influence 'Culture' has on your negotiations. It does not matter if you are negotiating with a co-worker inside your own organization, a supplier, or a customer. Start by having a good understanding of your own cultural bias and how your negotiating approach may differ from that of the other party. Once you learn the cultural differences, don't just adapt yourself to the other party's culture. Learn ways to make the most of these cultural differences to craft more creative agreements. A good understanding of various cultural approaches to negotiating is to your advantage.Read more »
A negotiator should approach their negotiation much like an investor approaches the stock market. With today's wild swings in the stock market, this can be quite a challenge! But, here's what I'm talking about. Prudent investors look to increase the value of their money. They look at growth potential, expected dividends, and the risks associated with an investment. Investors attempt to calculate the present value of the potential investment given the expected growth rate and dividend payouts. In this way, their investment decision is balanced against the associated risks; compared to other potential investments; and a decision is made to buy or not. Is this potential investment fairly priced, over-valued or under-valued? A good negotiator does the same thing -- but on a very subjective level. Negotiators need to focus on the present value of satisfaction; determine the value of future satisfactions (and dissatisfaction); and compare this to making a deal, making no deal, or working to create a better deal. This brings up a fundamental but subtle point about any negotiation. The flow of positive and negative satisfiers in any deal is in the mind of each participant. Some participants are optimistic about the future. Others are pessimistic. Some want immediate satisfaction, while others are prepared to wait. Much of your strength as a negotiator comes from your ability to provide satisfaction to the other party. You can help increase the present value of the deal by getting the other party to place a higher value on future satisfaction. You can do the same thing by showing the other party that future dissatisfactions are unlikely. consessions can play a big role in creating a flow of satisfaction. But this flow between people is not a simple as it looks. Before you start making concessions to increase the other party's satisfaction, think about how you want to do it. Take into account who will benefit, in what way, when, and from what source. A concession can provide satisfaction to the receiver now or later. Maybe the receiver wants to take it all at once or a little at a time. A concession can direct its benefits to the organization, specific parts of the organization, third parties, to the other negotiator on a personal level, or to all of them at once. Make sure your well meaning concession does indeed provide satisfaction -- and not doubt, or dissatisfaction. Concessions can move people closer together (raise satisfaction) or move people further apart (decrease satisfaction). Be careful! Every negotiator has the same role to perform: to raise the present value of future satisfactions for the other person and help the other party reach a decision that will provide satisfaction to both parties.Read more »
Avoiding a Deadlock
My last post gave examples of segues you can use to move a competitive negotiation or one about to deadlock into a collaborative mode. Below are still more examples of how to avoid a deadlock with Collaborative Both-Win® negotiating. The “Consultant or Third Party Advisor” segue. Moving from a conventional competitive or transactional arms-length mode of bargaining to one that is collaborative and we-centered is rarely easy. Both parties are, after unresolved frustration and talk, encumbered with positions and statements that make cooperation difficult. It is at that point that consultants or third party advisors or staff can help move stalled talks to a Both-Win® path. A third party advisor can be anybody in either organization who is recognized as knowledgeable about the matter under consideration and reasonably trusted by both sides. Their role is to suggest ways in which they can integrate their needs and resources for mutual gain. The “Listening with the third ear” segue. Listening with the third ear means listening with all your senses and all you attention. Even non-task talk is full of content. Nothing that is said or displayed is extraneous to the matter or issue involved. What is said or skipped over lightly may be important. Body language, voice and gestures tell a story if observed closely. The reaction of others at the table may reveal as much or more of what is essential than words themselves. Observant and involved listening that picks up on subtle clues about hidden interests leads to opportunities for further talk and collaboration. The “What If” and “Would you consider” segue. This approach allows you to try out different ideas and get the other person’s reaction to them. Such knowledge is useful in any negotiation. “What if” and “Would you consider” are questions a negotiator should always think about asking when there is a need to get more information about exploring alternatives that might lead to Both-Win® opportunities.Read more »
The “Garbage on the Lawn” Response
Not only does each of us have failings, there are always people around to tell us how imperfect we are. That’s why the “garbage on the lawn” response works as it does. Recall for a moment the team we put together to develop our invention of a lifetime: the better mousetrap. Now, time has passed. The project has gone modestly well except in one important respect. Design engineering is six months behind schedule and holding up others on the team in getting their work done. The inexpensive computer chip device necessary to snap shut the trap has not performed properly. Engineering has completed a new design they feel will solve the problem. The new trap will be ready for full testing and production in four months at an additional cost to complete of $300,000. At a special meeting, engineering has just completed a carefully prepared presentation and invited team questions. Unfortunately, everyone is skeptical of the engineering solution and forecast because this is the third time their design has failed. Most doubt that this fourth approach will work and believe that added costs will exceed $600,000 rather than $300,000 and take much longer to complete than four months. No sooner is the new plan presented by engineering than a dissenting voice is heard. That voice is from the head of team quality control and testing. Her people have suffered from most of the past engineering errors. She is not about to let her doubts go unheard. The head of testing responds to the presentation by saying, “Frankly, I think you’ve got it wrong again. This is your fourth try at a good design. Your first three failed miserably. Now, here we go again. I don’t know what to do. Last time you promised to complete the work by June. I hired three lab techs to do the testing and data collection. I’ve wasted a lot of time and money.” How do you think the head of engineering felt about his new design and schedule after hearing this response? He became unsure of his presentation. What he had experienced is what we in negotiation call the “garbage on the lawn” response. Such a response reduces our aspiration and confidence level. It prepares us for retreat and saps our energy. “Garbage on the lawn” is commonly used by buyers to reduce a seller’s proposed price. Early in the talks these negative remarks remind the salesperson about everything their company failed to do in the past year. The hapless salesperson is ready to reduce their price so they will retain the unhappy buyer’s business. Internally in most organizations there is a lot of “garbage dumping” every day. Relationships suffer. The best way to handle “garbage on the lawn” is not to succumb to its implications: that you have failed before, are likely to fail again and now must pay a price for it. Preparation for this onslaught is necessary. Make a list of all that went well and actions taken above ordinary expectations. Too often what we do well day after day is taken for granted and forgotten. Don’t let that happen when negotiating with anyone in your organization. It’s well to remember that those who throw the garbage often bear a measure of responsibility for what went wrong in the past. History is rarely clear about such matters as fault and responsibility. The less we go into the past the better when it comes to faultfinding in negotiation.Read more »
You Have More Power Than You Think-Part Two
We at Karrass have tested the “You have more power than you think” hypothesis many times at practice negotiations conducted at programs worldwide. We do it by providing each attendee with a private information fact sheet prior to negotiation. This sheet includes their strengths and weaknesses as well as facts related to the other’s power position. Then, during the practice negotiation, the parties bargain to reach agreement. Outcomes are posted for all to see. A critique and discussion follows that almost always reveals that most participants dwell on their own weaknesses and pay less attention to their strengths. They focus on what the other can do to them if they fail to agree rather than the reverse. As a result of this negative thinking, participants tend to take an opening position by asking for less than they might otherwise. After the critique discussions end, participants are always surprised that they dwelled so much on their weaknesses rather than focusing on their strengths. From now on, when you prepare for any negotiation make a list of your strengths and what you believe to be the other person’s limitations. Before your next negotiation, review the six principles of power that follow to open your mind to aspects of power that might easily be overlooked. First, the exercise of power always involves cost and risk. Those with power who are unable or unwilling to incur cost or risk abdicate their strength. Second, power may be real or only apparent or assumed. Organization charts rarely determine where the real power lies. Those with power unwilling to exercise their strength do not have power unless you assume they will use it. For example, someone in a higher position has the power to punish a subordinate. If the superior has no intention of punishing the subordinate, then that power is for all practical purposes nullified. On the other hand if the subordinate believes he will be punished, that source of power remains intact. Third, power changes over time. The balance of power moves as the balance of contributions and benefits between the parties changes. Good negotiators compensate for such changes in the balance of power by incorporating such changes into their agreements to keep them from failing over time. If one party to a negotiation has little power at the start of a project they may have considerably more as the project moves along and their work or expertise becomes essential. Fourth, the ends of power cannot be separated from means. Good and lasting relationships cannot be built from manipulative tactics. Fifth, power is always limited. Its range depends upon the specific situation, the general economy, the government or such structural matters as policies, company regulations, ethical standards and present or future consequences, whether known or assumed. Sixth, power is always relative. Rarely, if ever, does one side enjoy complete power over the other. Understanding the sources of power and making the most of them will add credibility to our position and confidence in your assertions.Read more »
The Relationship Mode
Two or more team members enter into a negotiation. They are trying to reach a consensus on how to resolve a problem facing them. Their viewpoints differ. Each specializes in something different. Each is motivated in part by personal interests. Both would like to resolve the matter dividing them and complete the project successfully. Why should we care so much about their relationship to one another? In the book, A Behavioral Theory of Labor Relations, it says: “Two parties negotiate. The negotiating process shapes the division of the product of their joint efforts. The negotiation process also facilitates the resolution of joint problems and the integration of their interests. A third result of the negotiation process is a maintenance or restructuring of the relationship of the participants toward each other.” Whatever the issue, the parties come to the negotiation with attitudes toward one another. The bargaining process is affected by their relationship, be it good or bad. Whether they like, trust and respect each other mediates their every offer and counteroffer, their responses and positions, and of course their strategies and approaches. How they treat each other as the negotiating session proceeds then affects their initial relationship for better or worse. Negotiators wary of each other as talks start may change is the other person is candid and open during the process. Respect can grow or diminish as each party exchanges viewpoints. A negotiation within a negotiation is taking place as they talk. The parties, while discussing and exchanging ideas on the issues, are re-establishing their relationship. At the end of the process they may think well of the other or wish never to work with them again. Three basic rules govern the relationship mode and deserve a place in a negotiator’s planning and preparation kit.Read more »
- The relationship that exists between the parties affects how they will act at the table and the behaviors, strategies and tactics they will employ.
- What one or the other does or says during the talks has an effect on the attitude and behavior of the other as talks progress.
- The relationship between parties not only affects the outcome of their bargaining but also, in a reciprocal way, the outcome and how it was reached affect their willingness to abide by the agreement and their future negotiations.
Get Your Message Deeper into the Other Organization
Negotiators bargain for others in their organization as well as for themselves. Every person in an organization has her own set of needs and expectations as well as a highly individual viewpoint about which issues and goals are important which can lead to internal corporate conflict. Conflict in the organization can result from different facts, methods and values. There variations cause group members to look at issues in a personal way and to search for group solutions that provide as much safety and satisfaction as possible. It is obvious that negotiators are faced with the uncomfortable task of reconciling a bewildering number of organizational demands besides their own. The negotiator’s dilemma may be intense. If she is passive about the excessively high group goals and expectations in her own organization, she may encounter a difficult situation at the table. On the other hand, if she persuades her own members to lower their expectations, she may be accused of not believing in her organization’s goals or values. The negotiator’s boundary role between her organization and that of the other party requires balancing the needs of the factions at the table with the needs of those who are not there. When there is a deadlock, it is often because the negotiator cannot say “yes” to the other party when others in his organization are saying “no.” He also needs to get the other negotiator to get a “yes” from his own people. The suggestions below are designed to make it possible for you to gain support in the opposing party’s organization for our position and arguments. ONE: Consider function-to-function contacts such as an engineer-to-engineer, service giver-to service giver or consultant-to-affected manager. Be sure they understand how your position benefits them. TWO: Consider a summit meeting between high level executives of both parties. THREE: Consider whether it is wise to bypass the opposing negotiator’s authority level. You will often find the other side’s boss easier to deal with than the person opposite you at the table. FOUR: Consider the appropriateness of distributing information directly to members of the other organization if you think that your message is not reaching them. FIVE: Consider going off the record. A private meal with the team leader of the other side can do much to break barriers. SIX: Send a message through third parties. That’s what the Japanese do. The negotiator on the other side can rarely agree to settle if those she represents do not want an agreement. Your job is to help the opposing negotiator win their approval so that she can safely say “yes” to you.Read more »
Use a Mediator
In Japan, mediators play a large role in buy-sell negotiations. Mediators, usually old friends of both, introduce buyer and seller. When the seller is ready to make a proposal, the mediator assures that the seller’s price, terms, specification and scope of work for the product or service to be rendered are in line with the buyer’s needs. There are few surprises for either party when these mediators do their job well. During the performance phase, it is the mediator who helps settle disputes. If prices must be changed because the seller is losing money, or if the buyer has reason to need a lower price, it is the mediator who harmonizes the divergent viewpoints. Disputes between buyer and seller about property rights, sharing of production improvements, quality of standards or layoffs of employees are resolved with the mediator’s help rather than by law. Such disagreements rarely go to court in Japan, which has far fewer lawyers than the United States. Mediators are catalysts who maintain the state of harmony between Japanese suppliers and their customers. They facilitate agreement in several ways:Read more »
- They can sell new ideas to each side more easily that if the same ideas were proposed by either party alone.
- They can cause both buyer and seller to ask themselves: “What decision do I want the other side to make and what must I do to help them make that decision?”
- They can suggest realistic expectations.
- They can invite both parties to talk once more after they walk out.
- They can listen privately as each side expresses controversial ideas without angering the other.
- They can stimulate mutually beneficial win-win creative thinking.
- They can listen in private to on side expressing distaste or distrust of the other without angering the other side.
- They can suggest compromise positions that either party alone would be afraid to propose for fear of weakening its bargaining position or power.