Negotiation Space

Is it non-negotiable?

noreply@blogger.com (Karrass) — Wed, 11 Nov 2009 16:32:00 +0000

We often say that everything is negotiable, but sometimes negotiators come to the table with a list of non-negotiable demands. How do you deal with issues that are not up for negotiation?

Non-negotiable demands tend to be extreme, and defy compromise. Sometimes, they are centered on ethical, religious, professional or economic values that are deeply held. By making non-negotiable demands, some negotiators demonstrate their convictions.

In business negotiations, non-negotiable items tend to be issues such as cost structures, trade secrets and management decisions.

Some negotiators use non-negotiable demands for the express purpose of creating a deadlock. Indeed, they do not want to reach an agreement, and they use unrealistic demands to create an environment where compromise cannot be reached.

However, nonnegotiable demands are a part of the bargaining process. They lower the other party’s expectation and make him or her more willing to compromise on other issues to avoid having a confrontation of deep-seated values.

There are several countermeasures you can use when faced with non-negotiable demands:

1) Conduct off-record talks
2) Dial down hostility
3) Ask for an explanation of why these demands are non-negotiable
4) Discuss the issues that ARE negotiable
5) Avoid panic and anger

Have you gone into a negotiation with non-negotiable demands? Did you end up compromising?

Negotiations in the spotlight: Philadelphia Transit

noreply@blogger.com (Karrass) — Mon, 09 Nov 2009 17:52:00 +0000

Negotiations have been big news this week in Philadelphia.

Philadelphia public transit, run by the Southeastern Pennsylvania Transportation Authority (SEPTA) had been partially stopped due to a six-day worker walkout, which ended today. At issue was the new contract between the SEPTA transportation worker’s union (TWU), which represents 5100 workers, and SEPTA officials.

The strike began on Tuesday of last week, disrupting trolley and bus service in Philly.

“Workers had asked for a 4 percent annual pay raise and a $25-per-month increase in pension payments for each year of service. It previously sought a 6 percent annual wage hike. Transit officials had proposed no pay raises for the next five years, and then offered a 2 percent increase for the third and fourth years of the contract.”
Read more: http://www.allheadlinenews.com/articles/7016920509#ixzz0WNuK1nO4

Resolution was reached over the weekend, with the intervention of Pennsylvania Governor Ed Rendell, who brokered a tentative contract agreement.

According to the Wall Street Journal:

“One last-minute sticking point in the contract negotiations was that Septa wanted a provision to re-open the contract if U.S. health-reform legislation is passed, in case reform would change the economics of union members' health plans. But the union objected and that language was stripped out...” (http://online.wsj.com/article/BT-CO-20091109-711603.html )

The Philadelphia Inquirer is reporting the following:

“The five-year contract also calls for a 2.5 percent raise in the second year, and a 3 percent raise in each of the final three years. It increases workers' contributions to the pension fund from the current 2 percent to 3 percent and increased the maximum pension to $30,000 a year from the current $27,000 a year.”
http://www.philly.com/philly/news/breaking/69522612.html?page=1&c=y

Team Negotiations Lead to Better Results

noreply@blogger.com (Karrass) — Thu, 05 Nov 2009 19:51:00 +0000

When conducting business negotiations there are very few instances where it is better to do it individually rather than as a team.

There are many advantages to team negotiating:

Broad base of knowledge
Teams are more creative than individuals
Teams are involved in better planning and better thinking
Teams set higher targets for negotiations
Team members reinforce each other’s strengths

According to an article (http://www.leighthompson.com/media/are_two_heads_better_than_one.htm) extracted from the Harvard Business Review:

“Team negotiations are generally more accurate than solo negotiations in discerning the other party’s interests and, as a result, they are better able to find common interests and create the win-win situations that benefit both parties.”

Whenever you are negotiating in a team you must have a good team leader. Team leaders are tactful and flexible. They know how to manage a diverse group of folks to achieve one end result. Team leaders must be able to control the content and flow of the discussion.

Having the right team will make the difference. Chester L. Karrass advises that you should never negotiate with a second-rate team. Take the time to recruit the best members for your negotiating team, and this will pay off in a more favorable negotiation.

Team negotiations take some planning. As this article by Tom Wood on AllBusiness.com points out (http://www.allbusiness.com/human-resources/819060-1.html) to negotiate as a team you need to follow certain steps:
1) Build the team
2) Prepare for the team negotiation by practicing and planning
3) Prepare the timing

Wood concludes by saying:
“....when complex multi-million dollar deals are at stake, effective team negotiating is critical. Who represents the team, when and how they speak and the role each team member plays can make or break a highly profitable deal.”

Do you participate in team negotiations? How does your company or organization select its teams?

It's all about people

noreply@blogger.com (Karrass) — Wed, 04 Nov 2009 16:14:00 +0000

In the end, all business is conducted between people. As much as the world has become computerized and automated, we still shake hands with a person to seal a deal.

Who you do business with is important. Choose your partners carefully. The right partners can help close a deal, while the wrong partners can make things go south quickly.

As Chester L. Karrass says in his book, Give and Take:

“Long term relationships based on integrity are essential to negotiation and to the day-to-day administration of agreements that follow.”

You may need to disassociate yourself from anyone that the other side may not like, who may have a bad reputation or who may act suspiciously. Obviously, shady characters (con men, deadbeats) are very bad partners—stay far away!

The right partners, on the other hand, are people who are trustworthy, have integrity and who show goodwill. Dr. Karrass calls these people “reliable nice people.” Being reliable and being pleasant are two key characteristics of someone with whom you want to do business.

According to former Secretary of State James Baker III, the traits of a good business negotiator are:
1) Someone who catches on quickly
2) Someone who is likeable
3) Being team player
4) Understands/penetrates the issues
5) Resourcefulness
6) Being knowledgeable
7) Being persuasive

Notice that being likeable is near the top of the list.

To do good business, do business with good people!

Is it ethical?

noreply@blogger.com (Karrass) — Mon, 02 Nov 2009 16:23:00 +0000

As Dr. Chester L. Karrass writes in his book Give and Take:

“Unethical tactics for achieving worthwhile goals ultimately destroy the positive value of those goals.”

In business negotiations, we are working to achieve a goal. However, we should not be so goal-focused that we fall into unethical tactics. As Dr. Karrass says that unethical tactics “....have no place in the business world. Those in the gray area between right and wrong should be looked at with skepticism.”

Whenever we enter a negotiation we may ask ourselves what will I do to achieve my goals? The website, Culture at Work (http://culture-at-work.com/ethics.html) on its section regarding ethics, puts it this way:

“When someone else stands in the way, the negotiator faces the core ethical issue of negotiation: when are my needs and wants more important than treating this person in a moral or socially acceptable manner? Whatever choice you make may involve significant costs to yourself, to the other party, to the wider community. Often the "right" thing to do is not clear.”

Some behavior is clearly wrong, like lying. But what about withholding information, is that unethical? What about bluffing?

According to Dr. Karrass, “Business bluffing is part of negotiating. However, the rules forbid and should penalize outright lying, false claims, bribing an opponent...”

In order to avoid unethical behavior and tactics, we must accept that ethical behavior is important and recognize unethical strategies and tactics. We may often have to take the higher road because the other party may not always act ethically.

Dr. Karrass suggests instilling the following guidelines:

Do not allow lawbreaking or lying
Avoid misrepresentation and exaggeration
Select ethical people to be on the negotiating team
Negotiate in good faith
Enforce the Golden Rule: “Do unto others as you would have do unto you.”

Have you been confronted with unethical behavior during a negotiation? How did you deal with it?

Clarity is a virtue

noreply@blogger.com (Karrass) — Fri, 30 Oct 2009 15:10:00 +0000

Sometimes you think you are communicating well but you are not. The conversation isn’t going where you want and you are not reaching any kind of agreement. That is because to truly communicate, the other party must understand both what you are saying and what you mean. Sounds simple, but it often is very complicated.

In business negotiations, the ability to communicate ranks near the top of needed skills for a negotiator. And most important in the spectrum of communications skills is verbal clarity.

Speaking clearly and plainly goes a long way to make communication easy to understand.

There are two issues in communication. One has to do with the physical aspect of communication and the other has to with content.

The physical side:

To communicate clearly, you must speak clearly: Avoid mumbling and slurring your words. Enunciate, and be mindful of accents (some people have difficulty understanding different accents).

The content side:

Language choice: Are you using too much jargon? Are you using regional idioms? Are you using difficult words when simpler words are available (i.e. utilize instead of use)?
Complexity: Are you expressing yourself plainly? Or are you needlessly complicating what you are trying to say?
Style and grammar: Are you using proper grammar? Are you using overlong sentences or the passive voice instead of active voice?

Communicating clearly takes thought and practice. It involves your physical speech and the words you choose to express yourself.

In his book, In Business as in Life – You Don’t Get What You Deserve, You Get What You Negotiate, Chester L. Karrass quotes the following from Confucius:

“Therefore, a wise and good man can always specify whatever he names; whatever he can specify, he can carry out. A wise and good man makes it a point to always be exact in the words he uses.”

Staying on higher ground.

noreply@blogger.com (Karrass) — Wed, 28 Oct 2009 15:17:00 +0000

What happens if a business negotiation degenerates into a squabble? There is no agreement and no resolution and everybody goes home unhappy. Perhaps the best way to avoid this scenario is to take control from the beginning of the negotiation.

How do you establish a “higher ground?” You come to the bargaining table with back-up. According to Dr. Chester L. Karrass, there are five types of backup that can help you stay on higher ground:

1) Guiding Principles: Agreeing on principles makes it easier to agree on details, so establish the principles at the beginning of the negotiations. For example, a guiding principle is that the seller is entitled to a fair profit.

2) Guiding History (Precedents): It makes sense to know what has happened historically between the two parties: what prices were paid, quantities negotiated, any problems or issues. You can’t argue with history!

3) Guiding Logic: Using logic and reasoning makes any negotiation more civilized and thoughtful. Logic is persuasive.

4) Guiding Standards: Standards are really guidelines. What are the standard terms and conditions, the standard prices? By sticking with standards, your viewpoint may prevail.

5) Guiding Rules, Regulations and Laws: Before you go to the negotiation, be sure to research what company policies or government regulations support your position. Rules and regulations can help increase your legitimacy

Basically, it is up to you to gather together the information (backup) that you need to set the tone for the negotiation. By using this backup and communicating it clearly to the other side, you are lining up resources to favor your position. It is hard to argue with principles, history, logic, standards and rules!

What type of backup do you use most often?

Endgame: a movie about negotiation.

noreply@blogger.com (Karrass) — Mon, 26 Oct 2009 16:00:00 +0000

Last night on its Masterpiece Contemporary series, PBS aired Endgame, a movie based on the real, secret negotiations to end apartheid in South Africa. The talks took place in the United Kingdom between representatives of the African National Congress (ANC) led by Thabo Mbeki (played by Chiwetel Ejiofor) and representatives of the Afrikaner South African government led by Professor Will Esterhuyse (played by William Hurt).

The secret negotiations started in 1985 and culminated in 1990, when both parties agreed to hold official negotiations to abolish apartheid. In 1990, the de Klerk government made a large concession by freeing ANC leader Nelson Mandela.

The negotiations came about in an unusual way. Michael Young, who was then the chief of public affairs and communications for Consolidated Goldfields, believed something needed to be done to stabilize South Africa, which at the time was embroiled in growing violence and repression. The instability was threatening the company’s interests, so Young proposed “creating a neutral arena” to encourage negotiations. Young recruited both Mbeki and Esterhuyse, and convinced them to engage in secret negotiations on neutral ground in England. No one was to know about the talks and Consolidated Goldfields was not to be implicated.

Young arranges for ANC and South Africa government representatives to meet in a large country house in England, where he wanted to “maximize opportunity for chance meetings.” Part of the strategy was to break down the distrust between both sides.

The meetings start with an agreed agenda, in which the first order of business is to find out what demands, hopes and fears each side has. The ANC want to end apartheid and have majority rule. The government wants assurances that the ANC will stop the increasing violence. Complicating the negotiations was that during the first phase, which took place under the Botha government, government negotiators did not bring anything to the table. Later, when de Klerk took office, the negotiations were able to proceed because de Klerk government was able to offer to free Mandela.

If you missed Endgame on PBS, it will have its theatrical release this Friday, October 30. Here is one of dozens of reviews: http://www.boston.com/ae/tv/articles/2009/10/24/endgame_is_a_masterful_retelling_of_how_apartheid_fell/

Did you watch the movie? What did you think?

Language Skills

noreply@blogger.com (Karrass) — Fri, 23 Oct 2009 15:02:00 +0000

If you are native English speaker you’ve probably never given it much thought. You’ve been able to conduct your business negotiations without the additional burden of trying to figure out idioms and usage. For those who speak English as a second language, it’s probably much more difficult.

More and more, English is the universal language of business. For instance, deals between Japan and the United States are conducted in English. But does that put the Japanese at a disadvantage?

Language is more than just knowing the words. To be fully conversant in another language, you have to understand idioms, expressions, nuance, and alternative uses for words. For instance, in English we often say sarcastically, “yeah, right!” If you just listen to the words and don’t understand the sarcasm, this could mean that everything is OK.

In business negotiations, everything that is said at the negotiating table matters. Everyone must understand what is going on and what is being said. It is essential to master the language that is being spoken. That does not mean that you cannot participate if English is not your primary language, but perhaps it will depend more on your skill level.

For people who are learning English as a second language, specifically for business, there are many resources out there. We found this website that gives an overview of useful business expressions: http://www.eslgold.com/business/useful_expressions.html

Native English speakers also have to be aware of their language during a negotiation. In this case, it is not simply about understanding the words, but understanding the other side. For instance, are you dealing with people whose culture is more polite? Then you would do well to be more polite in your language. Are you using too much jargon? Are you being grammatically correct? In short, are you making yourself understood? Here’s a helpful guide on “How to Use Appropriate Business Language.” http://www.ehow.com/how_17589_appropriate-business-language.html

Have you encountered a negotiation where language was a barrier? How did you manage to overcome the situation?

Off the record?

noreply@blogger.com (Karrass) — Wed, 21 Oct 2009 21:20:00 +0000

We’ve all heard the following scenario: the politician tells the journalist that he will only talk off the record. The journalist agrees, the politician gives up some juicy information, and the next day, the whole story is told in the daily newspaper, citing an unnamed source, which it turns out can ONLY be the politician. Politician gets angry at the journalist, and trouble ensues.

But, for the record, there is a legitimate need for off-the-record talks when you are conducting business negotiations.

Off-the-record talks are any informal communication between the negotiating parties. The talks can be held in an elevator, in restaurant or wherever the negotiation is NOT taking place.

In an informal setting, people discuss their personal problems and gripes, and generally, the stuff of everyday life. These informal discussions make it safe to let out steam. Because there is no structure, and what is being discussed does not have to be agreed to, both parties can test assumptions.

Being off the record allows the parties to say what is on their minds, and give a more real sense of the issues and problems.

According to Chester L Karrass, off-the-record talks “are mandatory when official positions have hardened and deadlock is imminent. While it may be difficult to say anything conciliatory at the table, a few well-chosen words after dinner can indicate unofficial willingness to compromise.”

Because off-the-record talks tend to be more social in nature, people are easier on each other. It allows common ground to appear.

As Karrass punctuates: “Not everything that must be said can be said at the negotiating table. A good negotiator knows that.”

How often do you go off the record? Have you found that it has moved a negotiation to reach a deal?

What's your personality?

noreply@blogger.com (Karrass) — Mon, 19 Oct 2009 15:15:00 +0000

In business, especially in business negotiations, you are always dealing with people: their personalities, their needs and their opinions. Business decisions are sometimes influenced by personal issues and not solely by business strategy and the bottom line.

On this blog we’ve discussed issues like motivation, behavior and traits of a good negotiator because it is important to be aware that personality and personal needs come into play at the negotiating table.

Personality affects issue such as aspiration and goals. Chester L. Karrass, in his book The Negotiating Game, identifies the relationship between personality and aspiration levels. He tells us that someone that is achievement oriented, who believe that hard work pays off, has a high aspiration level. And in negotiations, those who have a high aspiration level reach higher goals.

Dr. Karrass recommends paying serious attention to the personalities of people on your negotiating team. His research found that personality factors are extremely important in effective negotiating.

Personality is defined as the essential character of a person. Usually we can find a group of traits that define a personality type. For example, in this article (http://www.streetdirectory.com/travel_guide/191402/communications/how_to_communicate_to_the_four_main_personality_types.html) Lee Hopkins classifies four general business types:

Extrovert

Amiable

Pragmatic

Analytical

He then suggests tailoring your message so that you can communicate effectively with each person. Clearly, personality influences how you understand and how you communicate.

There are tests designed to discover your personality type. A very popular test is the Myers-Briggs, which classifies personalities into sixteen distinct types.

Figuring out your personality, the personalities of those on your negotiating team and the personalities of those sitting opposite you on the negotiating table will be very valuable.

Do you prefer to negotiate with certain personalities? How does it influence the outcome of a negotiation?

Wise Negotiations

noreply@blogger.com (Karrass) — Thu, 15 Oct 2009 21:02:00 +0000

Sales perspective:

Today’s economy makes deals harder to close and margins tighter. Buyers are tough today. It is never easy to make a sale, but now it is harder than any time in recent years. Now you really have to negotiate.

Buyer’s perspective:

Procurement and supply chain managers are under tremendous demands to reduce costs. A recent study by Purchasing Magazine indicates purchasing professionals today are more focused on cost-reduction strategies than on other issues such as supplier capacity, finances or consolidation of suppliers.

Results show 48% of buyers polled said negotiating lower prices for products and services with their suppliers is their biggest priority right now. Other supplier-facing priorities ranked in order of importance included supplier consolidations (15%), ensuring the financial health of suppliers (14%), getting suppliers more involved with product development (12%) and, lastly, ensuring suppliers have the capacity to ramp up production when the economy recovers (11%).

Cost Savings Example:

Consider this example which illustrates the true business impact of negotiating better pricing from suppliers.

In 2008 ABC Inc. sold $987.4 Million and made a net profit of $81.4 Million, That’s about 8.2% net margin. This means, if an ABC Buyer can save $100,000 by being a better negotiator, this contributes just as much profit as if ABC could increase their total sales revenue by $1,219,512. And in today’s markets most companies are finding it rather difficult to increase sales.

So for ABC Inc. $100,000 in cost savings has the same impact as a $1,219,512 increase in sales.

Negotiating the Deal:

At the same time more organizations are pushing buyers to reduced costs, other organizations are pushing salespeople to increase sales—at higher margins. All this makes for some really tough negotiating.

So, what should salespeople do when negotiating prices with buyers that are on a price cutting mission?

Buyer’s must remain aware, and sometimes need to be reminded, that the cheapest per unit cost can often end up being the most expensive ‘total cost’ decision.

Switch from ‘Price’ to ‘Total-Cost’

Sellers must get buyers engaged in a ‘total-cost’ analysis. And it is in the buyer’s own best interest to do exactly that. This is really the only way a buyer is going to be able to discover, document, and get credit for ‘real cost savings.’ The blending of a buyer’s expertise on what they need, with a seller’s expertise on what is possible, provides a route to true cost savings. Best of all, during this discovery and analysis process, relationships are built which lays the groundwork for future business.

Satisfaction

The outcome of your negotiations must be a mutually agreed upon result that creates a Both-Win atmosphere rather than a one-win atmosphere. Satisfaction of both parties is key, and determines future business opportunities between the parties.

Are you being Lowballed?

noreply@blogger.com (Karrass) — Wed, 14 Oct 2009 16:04:00 +0000

We’ve all heard this one before: if it sounds to be good to be true, it probably is.
Keep that truism in mind when a seller offers you a price that sounds too low. Most likely, the seller is trying desperately to get you into a deal. What will happen later is that you will end up having to pay for “extras” or for any changes to the deal.

Anyone who is working with a tight budget could fall prey to a lowball offer. After all, you are being motivated by the bottom line. Buyers who don’t know the market well enough or who are not clear with what they really want can also fall victim to a lowball deal.

Lowballing is not limited to sellers. Buyers can also be lowballers. Today’s real estate market is being flooded with lowball deals. Candace Taylor reports in The Real Deal (http://therealdeal.com/newyork/articles/lowballing-turns-predatory) that:

“Potential buyers are now putting very low offers — often 20 to 40 percent less than the asking price — on multiple properties at the same time, a strategy that was virtually unheard of only a few months ago. Sellers, increasingly desperate to unload their property, are countering offers they once would have considered insulting. And as lowball offers become the norm, this back-and-forth seems to be accelerating the downward slide in prices.”

The best thing to do is to stay away from lowball deals. How? First you need to recognize you are being lowballed. Do your research. Be sure you know what the market price is for the product or service you want.

Here are a few suggestions from Dr. Chester Karrass to avoid getting stuck in a lowball deal:

1.) Know what you want
2.) Don’t get hung up on price
3.) Get full price breakdowns: be sure you know what will be extra and what it will cost
4.) Before doing any deal, negotiate your change procedures
5.) Don’t be greedy—someone always pays for lunch!

Have you been victim to a lowball deal? What happened? How would you have done things differently?

Do you make negotiating mistakes?

noreply@blogger.com (Karrass) — Mon, 12 Oct 2009 16:58:00 +0000

“The only real mistake is the one from which we learn nothing.” ~John Powell

Who doesn’t make mistakes? Nobody is perfect, and many of us may make some mistakes when we are negotiating. It’s only human, but learning to spot these mistakes may prevent them.

In his comprehensive negotiating book, Give and Take, Chester L. Karrass lists and categorizes several negotiating mistakes. Following are some to watch out for:

Power Mistakes
Underestimating your power
Assuming the other party knows your weaknesses
Being intimidated by status, statistics, precedents, principles
Revealing your power too early
Forgetting your opponent has something to gain from the negotiation

Concession Mistakes
Setting your initial demand near your final objective
Assuming you know what the other party wants
Accepting the first offer
Conceding without obtaining a concession in return
Losing track of concessions you’ve made

Closure Mistakes
Agreeing to a final agreement because of a time deadline
Being intimidated by the other parties “final” offer
Being afraid to break an impasse
Trying too hard to be liked in the final phase of negotiation

General Mistakes
Talking more than listening
Entering a negotiation with a chip on your shoulder
Discussing an issue that you have not prepared for
Not having a first-rate negotiating team on your side

How many of these mistakes have you made? Have you successfully avoided making them again?

What is your motivation?

noreply@blogger.com (Karrass) — Fri, 09 Oct 2009 17:35:00 +0000

“Every business transaction involves an exchange of motives.”(Chester L. Karrass in The Negotiating Game)

Perhaps when you enter any business negotiation your primary motivation is to achieve the best deal possible. The people your negotiating with will probably share the same motivation. However, both you and the other party probably have many secondary motivations, which are not as obvious.
Why is understanding motivation important? Motivation is what makes people tick and it shows what they really want. In a Both-Win negotiation you will want to satisfy both parties’ goals, and understanding the many personal and business motivations from both sides will make it easier to achieve these goals.

Here is a list of possible motivations:
1) Wanting to feel good
2) Wanting to avoid risk
3) Wanting recognition
4) Wanting job promotion
5) Wanting to work easier
6) Wanting to do what matters
7) Wanting to be listened to
8) Wanting to be liked
9) Wanting material goods
10) Wanting to be seen in a certain way (for example, as being of good judgment, honest, responsible, smart, etc.)

Many of these motivations are psychological in nature. A good business negotiator will seek to understand these motivations, and fulfill them when possible. In this way, the other party will feel good, and will be more likely to be cooperative.

Have you analyzed your motivations when you negotiate? Do you think your opposing party understands those motivations?

Playing good cop/bad cop

noreply@blogger.com (Karrass) — Thu, 08 Oct 2009 15:45:00 +0000

If you want to see a good cop/bad cop scenario played out, look no further than your TV, especially on the long-running crime drama, Law & Order. In the earlier episodes, Lenny and his partner (who changed about every two seasons) would find a suspect and take him in for questioning. One of the cops would play it tough, scaring the suspect or making him angry, and the other cop would play it easy, being more friendly and coaxing the information out of the suspect in a “this helps all of us” way.

Why is this scenario so effective? Simply because the bad cop makes you want to collaborate with the good cop. The good cop will seem reasonable and pleasant. And we all want to work with the more friendly types.

The good cop/bad cop scenario can be used in negotiations exactly the same way the police use it. One person on the team can be the designated bad cop. He or she will play it tough, be aggressive and have the biggest demands. When the time is right, the good cop takes over. The good cop will take the tone to a more cooperative level, and decrease the demands. The other side will be much happier to deal with the good cop, thinking his or her demands are much easier to deal with.

What if you are on the receiving end of a good cop/bad cop scenario? Can you recognize it and deal with it appropriately?

Chester Karrass recommends the following countermoves:

1) Let the bad cop talk until the other side gets fed up
2) Walk out
3) Use your own bad cop
4) Call a caucus
5) Learn to recognize that both the good cop and the bad cop are on the same side and want the same things.

Have you played good cop/bad cop successfully? Were you able to up your demands because of it?

Is it urgent?

noreply@blogger.com (Karrass) — Wed, 07 Oct 2009 16:57:00 +0000

When we scan business news stories about negotiations, many times we see negotiations described as “last minute.” For instance, here is a story about the last minute negotiations on Michigan’s state budget, where lawmakers scrambled to create a budget after their midnight deadline: http://www.detnews.com/article/20091001/POLITICS02/910010435/-1/rss

There is little doubt that when one or both parties at the negotiating table feel a sense of urgency, there will be a serious push to resolve the issues at hand. Sometimes, the only thing that leads to a resolution is the feeling that it is urgent to do so.

Urgency also plays a role in diplomatic negotiations. This past week we’ve seen a flurry of diplomatic activity regarding Iran’s alleged nuclear program. As a revelation was made that Iran had a second nuclear enrichment facility, American and European negotiators went in to high-gear, convening a high level meeting with Iranian representatives in Geneva.

When negotiations get down to the wire, resolution becomes urgent. Often, there is a deadline that must be met. The truth is deadlines force action because urgency is a great motivator.

As Chester L. Karrass points out in Give and Take:

“Deadlines pressure people into making an either-or choice. If the choose to accept the deadline, they get the deal over with. If they don’t, the consequences are unpredictable.”

For some people, to reach a deadline and have no resolution is failure. Most people, especially negotiators, want to avoid failure. This desire to avoid failure also leads to a sense of urgency.

Urgency will certainly lead to increased negotiation activity, and usually, to resolution. The easiest way to create a sense of urgency is to impose deadlines that must be met.

How do you deal with urgency in negotiations? Do you use urgency to your advantage?

Business Negotiations in the News

noreply@blogger.com (Karrass) — Wed, 07 Oct 2009 16:35:00 +0000

There have been two high profile negotiations reported in the news this week: General Motors-Penske and General Electric- Comcast.

GM-Penske
As part of its bankruptcy restructuring, GM planned to sell its Saturn brand. It had been negotiating with Roger Penske, who in turn had been negotiating with Renault-Nissan. Penske was unable to reach a deal with Renault, and the entire deal fell through. As a result, GM announced on Thursday that it will close all Saturn dealerships nationwide.

GM started Saturn in 1982 in order to compete with Japanese imports. The brand did well, and people liked its policy of no-hassle sales. However, sales had been declining, especially during 2009.

Read the Detroit Free Press account of the collapsed deal here: http://www.freep.com/article/20091001/BUSINESS01/910010457/1318/Collapse-Saturn-deal-stuns-GM

GE-Comcast
GE, parent company of NBC Universal, is negotiating with Comcast, the cable company, to spin off NBC by giving Comcast a 51% ownership. GE, which currently owns 80% of NBC, would buy the additional 20% from Vivendi. The new company would be entertainment focused and include some Comcast properties such as the Golf Channel.

CNBC is reporting that “Comcast would merge content assets that it values at as much as $6 billion, along with cash, so that it would take a 51% ownership stake. GE would control 49% and—as part of the spin off of NBC Universal—would be able to contribute as much as $12 billion in debt to the spun off entity...” (Read the full report here: http://www.cnbc.com/id/33123120 )

The negotiations are still ongoing and no deal has been struck.

The Making of a Good Negotiator

noreply@blogger.com (Karrass) — Tue, 06 Oct 2009 18:24:00 +0000

Are good negotiators born or made? Certainly, there are innate personality traits that make some people become good, or even great, negotiators. However, there are some skills that can be learned, which also improve your negotiation ability.

Here are some traits and skills of a good negotiator:

Practical intelligence/common sense
Verbal ability
Ability to think and communicate clearly under stress
Personal integrity
Good self-esteem
Emotional intelligence (ability to understand others, their motivations/reactions)
Aspiration to achieve
Planning skill
Product knowledge
Ability to research and understand market conditions
Ability to stay calm under pressure
Ability to deal with uncertainty

It could be argued that even if you are not born with some of these traits, you can develop them over time. Sometimes you can compensate for any areas of weakness by becoming highly adept at other areas For instance, you may not have great verbal skills and so you communicate better in writing.

Just having or developing these traits is not enough. These traits simply provide the foundation for being able to negotiate well. Negotiation itself is a skill that you can learn through training seminars like the many offered by Karrass.

Which do you think the number one skill or trait needed by good negotiators?

Argument or Negotiation?

noreply@blogger.com (Karrass) — Wed, 30 Sep 2009 17:54:00 +0000

When is a conversation an argument and when is it a negotiation? Although both arguments and negotiations try to resolve conflicts, there are differences.

Merriam-Webster defines an argument as “a): reason given in proof or rebuttal and b): discourse intended to persuade.”

Generally, in an argument, one side is trying to persuade the other that there is one correct way to view a situation. That side will work hard to persuade the other side of the validity of the argument. This is why many times arguments escalate.

As this article about persuasion from Suite 101 http://businessmanagement.suite101.com/article.cfm/resolving_conflict#ixzz0SblNpnf7
points out:

“When persuasion doesn’t work most people try again. They present their argument in a different fashion, hoping that their message will get through to the other side. But the other side has heard, considered, and firmly rejected the argument. Each repetition will only crank up the volume on an already unmistakable message: they disagree and repeated arguments will only aggravate them.”

Arguments tend to polarize and harden positions, sometimes resulting in grievances for both sides. Arguments can get personal and heated. Arguments tend to be zero-sum: only one side can be right. Negotiations, on the other hand, should be win-win.

Negotiations work to bridge positions, find the points of agreement so that a settlement can be reached. Negotiations find common ground, or areas where compromise can be made to achieve goals.

Negotiations involve some sort of bargaining whereas arguments require a complete turnaround in point of view.

In the end, if your goal is to achieve a solution to a problem, you don’t argue, you negotiate.

The Making of a Good Negotiator

noreply@blogger.com (Karrass) — Tue, 29 Sep 2009 16:33:00 +0000

Are good negotiators born or made? Certainly, there are innate personality traits that make some people become good, or even great, negotiators.

However, there are some skills that can be learned, which also improve your negotiation ability.

Here are some traits and skills of a good negotiator:

Practical intelligence/common sense
Verbal ability
Ability to think and communicate clearly under stress
Personal integrity
Good self-esteem
Emotional intelligence (ability to understand others, their motivations/reactions)
Aspiration to achieve
Planning skill
Product knowledge
Ability to research and understand market conditions
Ability to stay calm under pressure
Ability to deal with uncertainty

It could be argued that even if you are not born with some of these traits, you can develop them over time. Sometimes you can compensate for any areas of weakness by becoming highly adept at other areas. For instance, you may not have great verbal skills and so you communicate better in writing.

Just having or developing these traits is not enough. These traits simply provide the foundation for being able to negotiate well. Negotiation itself is a skill that you can learn through training seminars like the many offered by Karrass.

Which do you think the number one skill or trait needed by good negotiators?

Negotiating Tactics: Techniques

noreply@blogger.com (Karrass) — Fri, 25 Sep 2009 15:57:00 +0000

In our last post, we discussed maneuvers. This post is dedicated to techniques. Techniques are mechanisms that help you reach your goals. It is important to remember that neither maneuvers nor techniques are strategies. They are tactics to support your strategies. When well conceived and used appropriately, techniques will bring you added power in your negotiation.

Below is a table from The Negotiating Game, by Chester L. Karrass that lists a number of techniques:

1. Agenda
2. Secrecy Measures
3. Questions
4. Nonverbal Communication
5. Statements
6. Media Choices
7. Concessions
8. Listening
9. Commitments
10. Caucus
11. Moves
12. Formal and Informal Memorandum
13. Threats
14. Informal Discussion
15. Promises
16. Trial balloons and leaks
17. Recess
18. Hostility Relievers
19. Delay
20. Temporary Intermediaries
21. Deadlock
22. Location of Negotiation
23. Focal Points
24. Technique of time
25. Standards

Because of the quantity of techniques available, we will only discuss the first one: agenda.

Agendas are more commonly associated with diplomatic negotiations than with business negotiations. Agendas help to shape the negotiation, listing specifically what issues will be covered and their relative importance. Using agendas can keep negotiations on track.

Obviously, at the heart of using an agenda as a technique is the selection and placement of issues. You may have to bargain with the other side about which problems to introduce into the agenda, and what priority to assign to them. Dr. Karrass says this: “Because problem-solving depends on open discussion and value-sharing, the agenda should also consider whether problems should be solved at a different place and time...”

As you can see, using an agenda allows you to bargain about and prioritize your negotiation issues. It is a valuable tool to define and thus accomplish your goals.

Which technique do you favor? Tell us in the comments.

Negotiating Tactics: Maneuvers

noreply@blogger.com (Karrass) — Wed, 23 Sep 2009 18:13:00 +0000

There are two types of negotiating tactics: maneuvers and techniques. In business negotiations, a maneuver helps to influence the situation in order for you to reach your goals and defend your position. Techniques are mechanisms that work to reach your goal.

There are ethical and unethical maneuvers, and you may deal with both in any given business negotiation. If your opponent lacks integrity, you may be subject to unethical maneuvers. To defend against unethical maneuvers, you must be able to recognize when these are being used.

Dr. Chester L. Karrass classifies maneuvers into six categories:

1) Timing: These set the tempo of the negotiation and include deadlines, speed and patience.

2) Inspection: To verify information you may use maneuvers such as third party access to records, open inspection of documents and full disclosure.

3) Association: Define who are friends and who are enemies. Your associations can strengthen your bargaining power. Association maneuvers include creating alliances and disassociations.

4) Authority: Authority maneuvers deal with decision-makers, and include restricting the right to make final decisions (limited authority) and using third-party authority (arbitration or mediation).

5) Amount: Maneuvers that deal with prices, quantities or degrees include making fair and reasonable offers, using bulwarism (take it or leave it) and non-negotiable demands.

6) Detours: These maneuvers are designed to reduce the amount of information the other side can gather on you. Some are decidedly unethical such as using decoys or denial. Other detour maneuvers include playing good and bad guys, the scrambled eggs maneuver and low-balling.

Do you have a go-to negotiation maneuver? Why and how do you use it? Please share your experiences in the comments.

Predictable Behavior

noreply@blogger.com (Karrass) — Mon, 21 Sep 2009 15:41:00 +0000

Wouldn’t it be nice if you could predict exactly what the other side was going to do during your next business negotiation? Well, you probably can, and no, you don’t need a crystal ball. All you need is an understanding of what the other side has done before.

Most people are predictable. Perhaps you don’t act the same in every situation but you most likely follow a set pattern. You also tend to react predictably. For instance, some people will always use humor to defuse a stressful situation.

In his book The Negotiating Game, Dr.Chester L. Karrass tell us the following about predicting behavior:

“The best way to predict behavior is to look at a person’s history. A careful study of the other person’s habits, temperament, opinions and values will reveal useful patterns. The personality traits of a person tend to guide his or her behavior in accordance with the individual’s major intentions.”

Knowing the other person will obviously help you predict his or her behavior. If you have negotiated with him or her before, you have a pretty good idea of how he or she will react. But what if you are negotiating with someone you don’t know and you haven’t had a chance to do more research on? The most important rule about predicting behavior is to know that people will always act to protect their self-interest and their self-image.

Every negotiator would do well to become a student of human behavior. Being able to predict reactions and behavior will certainly give you an edge at negotiation time. You may even be able to adjust your behavior to elicit the type of reaction you are looking for.

Have you been able to predict the other side’s behavior? Has that helped you when you are negotiating?

Making Concessions

noreply@blogger.com (Karrass) — Thu, 17 Sep 2009 18:32:00 +0000

In most negotiations, both sides move from their original positions. It is wise to leave yourself 'negotiating space' when you make your initial offer.

Each side to a negotiation usually compromises by making some concessions to reach agreement. Careful concessions help guide you through this process towards a mutually satisfying agreement. Below we list some tips on things to keep in mind when making concessions.

Don't Give Free Concessions
Never give a concession without obtaining one in return. Don't give concessions away free or without serious discussion. A concession granted too easily does not contribute to the other party's satisfaction nearly as much as one that they struggle to obtain.

Craft Your Concession Wisely
Concessions that are poorly made can serve to further separate the parties rather than bring them together. A concession may serve to raise the aspiration level of the other party if it is interpreted as a signal of your weakness. Don't be too quick to give a concession, and don't 'shoot from the hip' -- think through the potential impact of any concession you give. How a concession is made is as important as the value of the concession.

Keep Count
Never lose track of how many concessions you have made, regardless of their value. The overall number is important and can provide bargaining leverage. Keep a written record of your concessions.

Stay Flexible
Flexibility is like money in a checking account. Do not use up your "bank account of flexibility." Every concession should bring you closer to some goal. If you use up all of your potential concessions your bank account is down to zero and deadlock is harder to avoid. Always look for a concession that the other side will value more than what it really costs you.

Build In a Way to Retreat
Don't feel constrained to stick with a concession on a specific issue. The whole agreement is more important than individual issues. Indicate to the other side that all concessions you give are tentative and based on a satisfactory overall agreement (i.e. "tie a string"). Some people tend to stick to interim concessions when they should not. They fear that their integrity may be questioned if they retreat from concessions they have made. Such rigidity can be costly.