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Negotiation Blog - Limited Authority
Politicians' Negotiations -- What Can We Learn?
By Thomas Wood
Whatever the nature of our negotiations (commercial, legal, regulatory, internal, etc) we can learn from the ups and downs of some of the most prominent public negotiations. With the Euro in serious trouble and economies worldwide shaken, government negotiations over economic strategies are around the clock and very public. The US negotiations over federal budgets, taxes and spending are a prime example.
With several US significant tax and spending provisions set to kick in (or lapse) in December and January, official Washington will be furiously bargaining at year’s end. And the stakes couldn’t be higher: the fate of the US national economy, the credit rating of the U.S. government, and the confidence of the American people in their elected representatives’ ability to tackle big problems.
In last summer’s negotiations, President Obama and the Congress' House Speaker John Boehner came close to striking a “grand bargain” on long-term debt reduction. It combined restrictions on the growth of entitlement programs (which are trades dear to the Democrat party) with increased taxes on the wealthy (which is anathema to the Republican party). But at the last minute the deal fell apart. Examining elements of this failed negotiation through the prism of Best Negotiating Practices may well provide insight into what could happen at the end of this year, as well as provide guidance for our daily bargaining.
The 2011 budget talks were prompted by a deadline—namely, the need to raise the US government’s debt ceiling so it could borrow more money to pay its bills. Congressional Republicans used this deadline to try to force concessions: they refused to increase the government’s borrowing authority without obtaining agreement by the Administration to substantial budget cuts. While absolute deadlines can be helpful in focusing energy and avoiding unnecessary delay, skilled negotiators can also use arbitrary deadlines as tactic to gain advantage.
The Republicans took a position opposed to any tax increases. The President’s position was that he would not accept the level of cuts in entitlement programs sought by the Republicans without an increase in taxes on the wealthy. For both sides, the interest was to achieve debt reduction while maintaining the support of each party’s political base. Negotiators sought a solution—as good negotiators should—that served the two parties’ interests, even if it seemed to violate their positions (raising taxes by closing loopholes rather than raising rates, for example).
When the deal collapsed, Democrats charged that Boehner had lacked sufficient authority to bargain, and had been overruled by his Republican colleagues in the House. Negotiators should always have sufficient authority to strike a deal, but not absolute authority: carrying limited authority allows them to postpone or deflect unwelcome proposals. In the end, both sides decided that no deal was better than what they viewed as a bad one. They could both revert to the same, ready-made Best Alternative to a Negotiated Agreement (BATNA): elections, in which each side might achieve at the polling place what it couldn’t at the bargaining table.
While political negotiators in each country and all governments have special advantages and restrictions, everyone involved in negotiation can benefit from studying their successes and failures. It will be interesting to see if the US federal budget negotiators busy later this year are among those who have learned anything.
Six Halloween Tips to Unmask the Hardball Negotiator
By Marianne Eby
Do you ever feel like your negotiating counterparts are wearing the same Halloween masks that show up trick-or-treating at your door? Are the mad rush of negotiations in your business to spend year-end budgets and internally as you plan for the next fiscal year really any different than what goes on among the children’s back-room deals over their stashes of candy? Here are 6 tricks (or tips) to unmask the hardball negotiator.
Tomorrow night Halloween in the US evokes images of costumed children asking to trade a trick for a treat – the trick is they are masked as real and fantasy characters and in exchange they want lots of candy – a trade at the heart of every negotiation. With a strong commercial foothold in the US and Canada, this strange bargaining called Halloween has spread in recent decades to parts of Europe and Asia, and is also popular in Latin America.
Halloween celebrations permeate the US culture. More than $7 billion was spent on Halloween last year and about 74% of adults celebrate this holiday, defined by costumes, masks, and out of bounds behavior. Businesses and professionals often consider how to participate in the late October frenzy, since employees and customers experience and relish Halloween as a community celebration. In offices and schools and neighborhoods, in big and small businesses, in penthouses and party rooms, in C-suites and hotel suites, Halloween fun and zany antics are planned, encouraged, enjoyed.
For most businesses, there's also a scene behind Halloween. Often, late October marks the beginning of the end of the annual business cycle. Wrap-up issues are on the table, and plans are being made for the upcoming year. And if your house is like mine on Halloween night, the real bargaining goes on after the candy is collected, when the kids spread out their winnings and begin to trade. That's when we see the real masked characters using the best and worst of negotiating behaviors to get what they want!
Even if the Halloween fete and the year closing create a tension of opposing demands, deals will get closed. For example, while we are spending $1.2 billion annually on Halloween costumes, $85.5 billion is also being spent on computers. Corporate negotiators are working computer deals, equipment leases, supply contracts, phone usage and supplier agreements that keep businesses running, while $21.5 billion in candy passes from hand to mouth. Company representatives in all corners of the world commute their own shares of the $85 billion computer spending, or source and set prices for personnel who can create and support the internet architecture that will permit a share of the $255.5 billion in annual on-line sales. (Data source)
Negotiating is never frivolous and is not always sweet. The scary part is when our negotiating counterparts come to the bargaining table wearing their Halloween masks. We find ourselves faced with people dressed up as superheroes, who want to play “hardball.”
Hardball negotiators use tactics to distract, manipulate, or trick us into moving off our position. They believe that they can win more by playing hardball than by collaborating to create value. The hardball negotiator wears masks – meaning they don’t share their interests – why they want what they want, and don’t care about our interests – why we want what we want.
We want to make a deal, and our hardball counterparts seem only to be willing to make their deal. We are looking for flexibility, and our counterparts seem determined, inflexible, even intimidating. Whether we are are sales or procurement or management, trying to meet quotas, move excess inventory, or gain savings from volume and vendor choice, hardball counterparts are entrenched in their position and tactics.
In the spirit of this Halloween season, consider these responses to the hardball negotiator:
- Consider the tactic what it is – just a trick for a treat. Compliment your counterpart for their tough negotiating style as you would the costumed child at your door. Then suggest you are likely to give better concessions if you can get a commitment to collaborate. Once people make a commitment to be cooperative, most feel bound by it. Remember that their inflexibility is just a costume that can be removed.
- Model collaborative behavior by asking questions to discover your counterpart’s interests. Then offer to address any interests you learn about if they are willing to shift to a collaborative approach.
- Label the hardball tactic (not the person). For example, when they tell you their boss won't go for it, respond, “I see you've brought your bad cop in the room today. I could bring mine in too, or we could just get back to discussing possible solutions.” Then Probe, with sincere curiosity. Same if they tell you that discussing options is no use because they don't have any authority to commit to a different solution. You should say something like -- "We both have limited authority and for good reason; now let's talk possibilities so you can go back and get the authority you need."
- Negotiate the ground rules. Propose that the parties step back and mutually determine how negotiations are to be conducted, building in discussions of challenges and possibilities, proposals, brainstorming, counterproposals, etc.
- Co-opt them. Become friendly. It is always more difficult to attack/deceive a friend than an opponent. Ask yourself: Was rapport built in Exchange stage or did you skip it? Can you step back and build rapport now or interweave it throughout the remainder of bargaining?
- Respond in kind. For example, when the other side opens with an outrageous offer (high or low), respond with an equally outrageous counteroffer, and a smile. This works well if they are simply testing YOUR resolve, or if they are bluffing. If they see you are also skilled in hardball tactics, they may try these strategies to get you to be more collaborative. But be warned, people have a tendency to reciprocate negative behaviors more than positive behaviors.
As we begin closing our current year and preparing for the upcoming year, our negotiating teams can benefit from reviewing the collaborations and hardball negotiations we’ve encountered, just as we review our numbers. Remember to assess strategies to disarm the masked negotiator, since collaborative negotiations create bigger wins for all of us.
6 Tips for Negotiating Business Deals with Asian Counterparts
Only a short time ago, business across Asia was booming. It is common knowledge that companies worldwide are dependent on Asian factories, and that the current pandemic is having a far-reaching impact on global supply chains.
Re-negotiating business deals with Asian counterparts will mean remembering your foundation lesson in cross-cultural negotiating. Here are some tips to help you wade through the negotiation process and emerge more likely to succeed.
Be aware of the decision-making process and authority
The decision-making process and authority can vary by culture — and this is important to take note of as it affects how long negotiations can take and who you need to convince. In general, Asian cultures typically have top-down or consensus-driven decision-making styles. For instance, while it may take US or German business days or weeks to make a big business decision from executives, research from the University of Hong Kong has found that the Japanese take weeks or months due to consensus-driven decisions, but can pay off with fast and smooth transitions once the decision is made. Additionally, recognition of seniority or hierarchy is also another aspect to pay attention to, as in Vietnam, you must show the eldest person respect by giving them your business card first.
Address communication gaps
Aside from having language barriers, sometimes the true meaning can get lost because of cultural mores that impact cross-cultural negotiations. For instance, most Chinese and Japanese negotiators will never directly tell you “no”, but will expect you to understand it in other ways. This is also similar in India, where business negotiators have difficulty saying "no" as it can convey an offensive message, so they too, will say statements like "We'll see" or "Maybe" when they likely mean "No". For you to understand this, you must be able to distinguish high context and low context cultures. Blog on Linguistics defines the former as a culture where the context of the situation is emphasized, while the latter is a culture that emphasizes the verbal content of the message. In other words, high-context cultures are not straightforward, while low-context cultures are more straightforward. Realizing there can be gaps as simple as whether the word “No” was used or meant will remind you to seek clarification more often. Sharpen your skills with our tips for direct and indirect negotiators.
Allow them to Save Face
The West is highly individualistic compared to Asia. And while an article by Marcus on social media points out that we too are concerned about how others think of us, as “we might pick cars, accessories, clothes, and other material possessions based on what we believe these objects say about who we are,” the concept of ‘face’ is quite different in Asia. The Asian concept of ‘face’ is described as a combination of social standing, reputation, influence, dignity, and honor, and this is why East Asian cultures emphasize the importance of social harmony. For instance, you will not see a Vietnamese or Chinese businessperson pointing out that their boss made a mistake, as it makes the boss lose face because they were wrong, and the employee will lose face because they appear disrespectful. Understanding this delicate and respectful balance will help you maintain harmonious relationships when conducting negotiations.
Don’t assume their style of expression means the same as yours
When communicating with different cultures, how the other party views expression in emotion in the business setting varies to save face (see above). For instance, some cultures, such as the Chinese or Japanese, value a reserved style of expression and emotions, as well as seeing any public display as inappropriate. On the other hand, business culture in countries like India favors high communication, expressive styles, and value emotion as part of the process. They also appreciate humility and honesty even if things go wrong, as they are happy to guide you. Understanding this will help you avoid the trap of misinterpreting a reserved or expressive style during negotiations.
Aim for equally-mutual positive outcomes
Business negotiations in Asia are an opportunity to build relationships and find common ground. Uncovering mutual goals is vital for the parties to reach a win-win solution. Research from Singapore Management University suggests that Asian culture is fundamentally a low-trust culture, and will not do business with companies who they feel will not equally give and take. Thus, sharing the alignment of goals and aiming for mutually beneficial arrangements is vital to build trust, as companies are more likely to appreciate and build a long-term relationship with you if they see you are giving to the relationship in equal measure.
Take your time
Western cultures tend to view negotiations as sprints — the faster you get it done, the better. For Asian cultures, however, it’s better to take your time. It can take a lot of time for Asian hierarchy to make a decision, so Westerners need patience. For example, some Chinese and Indonesian businesses prefer to have ‘marathon-like negotiations,’ which means that most negotiations will occur over a long period of time. Not to mention, in the US, negotiations over the phone often happen, while some Asian cultures put a lot of emphasis on face-to-face interactions, regardless of how far away the two negotiators are from each other. In Singapore or Vietnam, for instance, meeting someone for the first time should occur in person, and be scheduled at least two weeks in advance. This is because they want to know who they're meeting, their role, accomplishments, etc. ahead of time. See our tips for building in time and showing patience.
by Farrah Prince
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