Negotiation Blog

MLB Negotiations – Who has more to lose?

By Leslie Mulligan

All of us want to see professional sports up and running again, and MLB could be the first post-Covid-lockdown. But only if the Major League Baseball (MLB) with its powerful, moneyed owners and the Major League Baseball Players Association (MLBPA), a seemingly united players union, can bridge their financial divide on players’ salaries. But deadlines force concessions: if Opening Day does not come by early July, there is no hope for a season this year. Which means we MUST be in the final stages of a 2020 baseball negotiation!

On March 16, the baseball season was formally postponed by MLB due to Covid-19, till at least mid-May, but with hopes of still playing a full schedule, as documented in this CBS Sports timeline.

Both sides were eager to plot a path forward and so convened at the negotiation table on March 26 to define what opening up again would look like. At that moment, the owners and the players were willing to tackle the health and safety challenges ahead, and also agreed to pro-rated player salaries on whatever might remain of the season. After all, no one wanted a repeat of the 1994-1995 season where the US national pastime stopped abruptly on August 11, when Collective Bargaining Agreement talks broke down. Public sentiment for baseball took a hit that year with no World Series;  both sides want to avoid reliving that history as a result of Covid-19.

Owners and players were “on the same page” on March 26, trusting each other to forge ahead together. Normally, major leaguers trust MLB owners to ensure their livelihoods with generous salaries, but with Covid-19 looming, players now were trusting MLB with their lives as well. Trust is crucial to any successful business partnership, but most certainly to the negotiations that serve as the foundation of an alliance.

Since late March, MLB and the players union seem to be successfully negotiating health and safety issues for the athletes as they take the field again, both in spring training as well as on the field, although some open issues remain. But one financial element became a significant obstacle -- player compensation. MLB expected that when the season started, they could play in front of their fans, and their initial proposal was based in part on the expectation of stadium revenue.

Without fans, the owners realized they could lose more than $640,000 per game, with no gate receipts or merchandise/food & beverage sales. That March 26 agreement was swept off the table with this new premise, as it was clear that baseball stadiums would not soon be filled with cheering fans. It’s not unusual that mid-negotiation, assumptions about the future change -- raw material prices rise, mergers occur, markets collapse, and in this case, a pandemic shuts down the gathering of fans – the crucial element to profit. Both sides went back to their camps to reconsider. The players expected to ensure that their salaries remained “whole,” but were willing to pro-rate their overall income, depending on the number of games played. And of course they want a longer season as a result. The owners insisted that with their revenue cut due to empty ball fields, they expect the players to share that loss by only earning some percentage of their pro-rated salary – the % to be negotiated.

The next MLB Proposal came in early May:  “MLB and the owners will seek additional pay reductions from the MLBPA to account for the revenue lost by not having fans in the stands. MLB will propose a 50/50 revenue split in 2020.” The players were NOT having it – a 50% cut when they had anticipated 100% of their per game salary. Any trust that existed in late March eroded quickly – as Jeff Passan of ESPN wrote on May 26:  “Trust, on the other hand, is hard to come by, and if this thing falls apart -- if the absence of a good-faith negotiation dooms the 2020 baseball season -- it won't be directly because of the coronavirus pandemic. It will be because of the erosion of trust in recent years among the leaders on both sides poisoned and polluted the landscape to an extent that a deal never was going to happen in the first place.”

The MLBPA challenged the owners to produce the data showing the financial losses that the owners claimed. In any negotiation, each side more easily comes to an agreement when they feel the offers are fair. Challenging data is often key to one side accepting an offer. Already the players felt disadvantaged, stressing that the health risk falls predominantly on the players taking the field, so the data needed to be reviewed and assessed to show more games produce greater losses.

But neither players nor owners want to be painted as the villains in this play, so discussions have continued, with the clock ticking loudly. 

A number of proposals have gone back and forth since that first MLB offer; fortunately, the health and safety challenges are being collectively and successfully tackled by both parties. However, financial hurdles persist. Neil Paine of FiveThirtyEight.com provides a deep dive into the MLB financials yet concludes “it still seems like all parties involved have too much to lose not to come to a compromise.” Some creative solutions have been introduced, with the potential deferral of salaries in the event the post-season is canceled, but owners pushed back on that. Even wealthy team owners are nervous about an uncertain future, and some have voiced concerns about already being maxed out on credit lines.

So for a 2020 season, what alternatives does either side really have, if any? In the lexicon of negotiation, what are their Best Alternatives to a Negotiated Agreement (BATNAs)? MLB and the owners believe they can unilaterally implement a shorter schedule season, but they risk the wrath of the players if they do. How the players react to that will be telling. Will they walk away and forego all 2020 salaries, citing health risks? Or will they file grievances that would take months to work through in arbitration and still may not conclude satisfactorily for either party? BATNA’s are never ideal!

So where does that leave the baseball fan now? The reality is that in negotiations deadlines force concessions! And MLB wants to get a 3-week spring training underway as soon as possible so that they can target a July 4th Opening Day. Why is that? Oddly enough, it is with the end in mind!  The Washington Post’s Dave Sheinin writes “MLB believes it needs to complete its postseason, its primary driver of industry revenue, by the end of October to guard against a potential second wave of the coronavirus.”

As of June 8, the latest MLB proposal was for a 76-game season, with 75% of pro-rated salaries, but not all of it guaranteed. Only 50% assured, based on the regular season; if the post-season is canceled, the remaining 25% disappears. Once again, the players have pushed back. But the MLBPA response is due June 10, ironically the day they had hoped spring training might begin. Who has more to lose? Owners or players? I think it’s the stakeholders – baseball fans. Let’s see if some trust can be regained in these final weeks, as July 4th is not that far off –  that looming deadline should push both parties back to the negotiation table in earnest.  Let’s hope we all hear “batter up” soon!

Negotiating Tip

Debriefing key negotiations makes you a better negotiator. Reflection on what worked and didn’t is money in the negotiating bank.


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Spending Time on Relationships is Never Wasted: Negotiation Lessons from Enron in India

By Thomas Wood

Everywhere I consult and teach on negotiations, people love hearing stories of the negotiations that didn't go well, and especially stories of the now infamous former US behemoth, Enron. Everyone remembers Enron’s meteoric rise to power in the 1990s – as well as its shocking fall into bankruptcy in 2001. Fewer people remember that the Houston-based energy giant had tasted defeat at least once before, when negotiations over a planned $20 billion power plant broke down with the Government of India. Why did this high-profile, lucrative deal fall through? One major reason harkens back to the most fundamental of all negotiation principles - spending time on relationships is never wasted.

In the late 1990s, Enron seemed to be on top of the world. The Houston-based energy company, named “America’s Most Innovative Company” six years running by Fortune magazine, claimed over $100 billion in revenues during 2000 alone. By December 2001, however, widespread accounting fraud and corruption had brought Enron crashing down in a stunning turn of events.

Although it seemed as though Enron could do no wrong, the company had in fact experienced a serious setback in the mid-1990s, when negotiations over the massive 2,015 megawatt Dabhol Power Plant – the first part of a planned $20 billion effort – broke down with the Maharashtra State Electricity Board and the Government of India.

Why did this high-profile, lucrative deal fall through?  Despite their business acumen, Enron committed two key mistakes during the negotiation process that sowed the seeds of the deal’s demise.

First, by pushing to sign a contract as quickly as possible, Enron negotiators failed to build a longer-term relationship with their Indian counterparts. As reported in Business Week, although Rebecca Mark, head of Enron International, justified their strategy by stating “time is money for us,” for instance, the speed of the arrangement looked suspicious to many key Indian powerbrokers. Influential local leaders immediately began criticizing Enron’s negotiation strategy as an affront to Indian sovereignty and argued that corruption must have been used to speed up the process.

Enron’s failure to cultivate a long-term business relationship with any local partners – (it also rejected the advice of many experts and refused to take on a local Indian partner as a minority equity holder) – meant that Enron possessed no trusted local partners to help navigate the pressures that inevitably accompany such endeavors. This made it virtually impossible for either side to capture valuable trades – and increased the likelihood that India would execute its BATNA.

Second, rather than thinking creatively in search of mutual gain, both sides resorted to positional-based, competitive negotiation strategies that manifested themselves in bitter criticisms and veiled threats. As reported by the BBC News, after local Indian officials characterized the power plant agreement as a “betrayal” and suspended payments, for example, then Enron CEO Kenneth Lay implied that his allies in the US government might cut off aid to the Indian government. Threatening India's relationship with the US crossed the line and sealed the end of Enron's power play.

In high stakes and complex negotiations, all the great financial analysis will not change the need for trust and strong relationships. We can all learn from Enron's missteps.

Negotiating Tip

Most people underutilize the caucus. What’s your hurry? Summarize, take a break, and make sure your counter offer is on the mark.


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Why did the negotiator cross the road?

By Marianne Eby

Negotiations are serious business, which is why it is important to understand, and build trust with, the other party. Great negotiators know that no matter how serious the interaction, laughter is often one of the quickest paths to trust; it can relieve tension, create a bond, improve everyone's moods, and foster the creativity you want for mutually beneficial agreements to emerge.

Researchers in many fields, from medicine to psychology to communications, are increasingly interested in the social power of humor and the physical and emotional benefits of laughter. Public speakers are trained to open presentations with jokes or funny anecdotes. Political candidates are now expected to demonstrate their sense of humor on the talk show circuit to improve their likeability. In 2010 Comedian John Stewart was voted the "most trusted man in America." His social power derives from the fact that he is knowledgeable and funny, which makes him seem more trustworthy.  

A sense of humor is useful during all phases of negotiation as well -- to signal confidence or shift power, to change the environment, to soften bad news, to avoid answering a question, to respond to a ridiculous offer, or to save face.

Telling a funny story or acceptable joke can also help you gauge whether the other party is on the same page with you. If the other side is not laughing, or even engaging in a joking conversation, pay attention: they are not where you hope they are. Not laughing in response to a humorous gesture is a sign of discomfort or disconnection.

So prepare with ice-breakers -- anecdotes or jokes that get a group to laugh before you begin bargaining.

Try these tips for opening an interaction with humor:

Tell a story on yourself: People love to laugh at absurd but real events. Carol Burnett famously said "comedy is tragedy plus time." A story you tell about yourself makes you more human.

Don't take yourself too seriously. Keep the humor light, and your expectations for laughter down. Nothing kills an attempt to develop rapport more than someone who can't laugh at him or herself. Mildly self-deprecating jokes imply trust.

Collect a few jokes that work for you. They're easy to find or to collect. Good storytellers and comedians prepare material in advance, to avoid hitting the wrong note, and to be ready to hit the right one.

What to avoid:

  • Stories and jokes about race, culture, gender, religion, politics, or hometowns
  • Offensive material
  • Sarcasm
  • Targeting something sensitive about them you discovered by being empathetic (don't overuse empathy!)
  • Stories or jokes that require long, complex setups, or special insider knowledge
  • Telling a joke if you are not good at it
  • Jokes that rely on an exact understanding of your language

Sometimes puns (ambiguous play on words with multiple meanings) can be fun – just make sure your humor is understood. Let’s say you’re in a tense negotiation and everyone is frustrated. You might say:

“Does any one feel the way I do? Trying to figure out a solution that satisfies us all is like getting ready for a root canal – it’s unnerving!”

Keep these guidelines in mind for successful humorous stories and jokes:

  • Make them modest, not ambitious
  • Keep them short -- avoid a long setup!
  • Try to be topical -- find a story or joke that's relevant to the negotiation at hand, a recent press story, your travel, etc.
  • Be yourself!

Be real. Leverage your own style and personality. Be willing to laugh. See how it changes your negotiation results!

Negotiating Tip

When negotiating via email, establish rapport first: start with a telephone call or web conference. Even better, if possible, start with a face-to-face meeting.


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Connect with Your Negotiating Counterpart

By Marianne Eby

You are about to begin a difficult project at work in conjunction with your co-worker, and he asks, "Want to grab a cup of coffee before we get started?" You may not want coffee, you may be busy, you may be dreading working with this person, or you may think chit chat is a waste of time.  But if you are going to successfully complete this project, you would be wise to respond with a resounding "Yes!" You have just received an "emotional bid" that holds the key to you getting more of what you want in the many negotiations that will unfold during this project.

As John Gottman described a decade ago in his book, The Relationship Cure, an emotional bid is a question, gesture, or expression that implies, “I want to connect with you.”  The label "Emotional bids" may be 21st century nomenclature, but the idea is as old as the first negotiation between cave men setting out on a hunt who sharpen sticks together, and will later have to negotiate who gets the best meat of the kill.

Emotional bids are part of all developing relationships, including those between co-workers and negotiating counterparts. If your polite answer to such a bid is "sorry I don't drink coffee" or "thanks but I have too much work right now," you are missing an critical opportunity to connect in a way that supports your inevitable ask for something you want.

Many of us fail to recognize or extend emotional bids. As a good negotiator, you already know that relationships are critical in your negotiations -- with customers you can't afford to lose, suppliers you need, and partners you want. The relationship you develop with the other party, whether positive or negative, impacts every aspect of your negotiation. Yet we spend more time alone completing tasks, and avoiding interaction, only to lament, "We don't have a trusting relationship!"

Recognize emotional bids for what they are -- a prime opportunity to build affiliations, find common ground or interests, and understand each other outside the conflict zone. 

Be on the lookout for "emotional bids" and use them yourself.  An "emotional bid" can be an interesting "tweet" or funny story, sharing an industry related article, a recommendation for a good book or restaurant, and a million other ways to connect.

Remember, institutions don't negotiate. People do. And people give the best deals to people they connect with -- people they like. 

Negotiating Tip

Decide early as you prepare for an important negotiation, does the situation call for you to compete, collaborate, compromise, avoid or accommodate. All strategies have a time & place.


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“Yes, and” Take a Negotiation Lesson from Improv Theatre

By Marianne Eby

Even when you prepare extensively for face-to-face negotiations, you often feel like you are on stage. Everyone is watching to see if your reaction or next move will ensure progress, or prevent it. Sometimes everything goes according to your intended script, and what you practiced must now come off as an unrehearsed reaction. Other times you have to respond to unexpected turns in the conversation. To get better at both these negotiation skills, let’s take a few lessons from Improv.

I was a theatre major in college in the '80s, and often draw on the Improvisation skills I learned in those acting classes and later as an attorney to help me now in my face-to-face negotiations. You can do it too.

What is improvisation? Without getting technical, it’s using words or actions in response to a stimulus in your environment, such as a question, an inner feeling, or some one else’s reaction. It involves spontaneity. Common terms for improvise are ad lib, extemporize, off the cuff, and play it by ear.

Theatre actors practice Improvisation as a way to find the spontaneity that the audience will need to experience when the actors deliver a script for the hundredth time. Improvisation teaches actors how to listen, sense others around them, communicate clearly, trust their instincts, and appear both spontaneous and confident in their reactions and choices. These same skills are critical to negotiating.

Improv Skills in Negotiations
Foremost among Improvisation skills are listening actively and building on that information. In Improv we use a simple "yes and" statement where the actors affirm what their partner has said and then add information. To do this well requires listening to a partner, internalizing what they have said, and coming up with a statement that moves the relationship between the actors forward.

It’s the same in negotiations. If you find yourself rehearsing your response while your counterpart is talking, you are not listening, and it will be obvious when you respond about your needs rather than theirs. To practice listening, use this simple Improv exercise in response to your counterpart. Say “Yes, and....” Knowing that you are going to say, “Yes,” your mind will easily focus on what is being said to you so that you don’t mistakenly concede something. Focusing, in turn, will allow you to be responsive in a way that your counterpart feels heard.

Actually saying "Yes" in negotiations can have dreadful ramifications, so in negotiations we want to be a bit more verbose. Try saying "Yes I see what you mean, and...; Yes, I am beginning to understand, and...; Yes you have some valid points, and...." You get the idea.

In Improv, like negotiations, the goal is to move the conversation forward in a way that makes sense for all actors. In Improv, one actor makes an offer -- to sit down at an imaginary table, to go inside a door, to talk about his female tennis coach – and another actor is supposed to accept the offer in a way that takes the scene forward. The responding actor can’t walk through the imaginary table, or talk about his mate’s male tennis coach for example. To do so is called "blocking," and it prevents the scene from developing.

It’s similar in negotiations. When one party makes a demand or proposal, it provides an opportunity to move forward -- closer to agreement. That doesn’t mean you have to accept the offer; it means you have to talk about it. And to talk about it, you have to listen. At a minimum, listening can be a powerful concession to other party’s need to be heard. Listening also enables you to understand the perceptions, emotions, and underlying messages of the other party, while building rapport, trust, and a strong alliance with the speaker. When you say "Yes, and...," ask questions, seek clarification, and suggest nuances that might work, you have demonstrated that you listened, and the conversation has moved forward. Don’t be a blocker, be an improviser!

The next time you engage in negotiations consider taking a lesson out of the Improv playbook, and use some “Yes and” statements. Say ‘yes’ by validating the information that the other party has given you, ‘and’ then add some information to demonstrate that you understand their position on the matter. See how the scene plays out! 

Negotiating Tip

Win-win is an attitude, not an outcome: people who view negotiating as an opportunity capture more value than those who see it as a threat.


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Should you present your negotiation offer differently to a man than to a woman?

By Marianne Eby

Taking gender into consideration as one factor that may affect a person’s receptiveness to an offer is helpful, as long as you remember that broad categories don’t always work and many other factors affect a negotiator’s style besides gender. But yes, it may help to present your offer differently to a man than to a woman.

This question came up at one of our negotiation workshops recently, during a discussion about how different communication styles affect negotiations. A participant brought up a rule of thumb she’d read about gender considerations when asking for something:

If you’re asking something from a woman, start with small talk or a narrative that prepares her for your request. But if you’re asking a man, do the opposite – open with your request, and elaborate with context and detail afterwards.

Was this a good rule of thumb, and if so would it be useful in negotiation?

Let’s consider this rule in a simple negotiation. If you want to ask your neighbor to remove a tree that leans into your yard, and your neighbor is a woman, you would begin by talking about her garden, your garden, and what is thriving in your yards, before asking about the tree. If your neighbor is a man, on the other hand, such a rule of thumb suggests you start right off with the “ask” about the tree, and fill in the details next.

The participant was spot on. In fact, the last few years of research on the differences between male and female brains can help us. In the 2008 book Leadership and the Sexes: Using Gender to Create Success in Business, Barbara Annis and Michael Gurian describe the differences in male and female brains (there are over 100, and how understanding them can make or break effective communication in corporate culture).

The research tells us that as it turns out, many clichés about gender -- i.e., women are more emotional, men are less talkative -- are proven by PET and SPECT scans of our brains! Images of brain activity show that:

  • In men, language tends to occur mostly in the left brain (the logical, linear-reasoning side), whereas in women, language occurs in both the left and right brain (the perceptive, intuitive, “artistic” side).
  • In women’s brains, there are more active sensorial and emotional centers, and they too have stronger links to language. Men don’t process as much emotion, and they don’t tend to link feelings and senses to words as much.
  • Men’s brains enter a rest state, or “zone out,” several times a day, and particularly when overwhelmed by words. Women’s brains usually do not shut off in this way except during sleep.
  • Men’s brains circulate more testosterone, the competition/aggression chemical, whereas women’s circulate oxytocin – the bonding chemical.

These differences have contributed to the different expectations women and men bring to communication, and to the clichés or cultural norms that have developed.

It’s easy to dismiss the chit-chat part of the approach to a woman as a waste of time. But it’s actually quite efficient, because women tend to get lots of clues during the chit chat. It’s not that the chit chat itself is so stimulating to them; what is stimulating is the wealth of information they gather from the chit chat about trust, comfort/discomfort, readiness to close, ect.

Men, on the other hand, tend to get fewer or no clues during such chit chat, so it makes sense that men find it stressful or wasteful: they find themselves processing what seems to be otherwise useless information.

Let’s say we approach Bob and say: "Hi Bob, how’s it going? I’ve got a question about this tree of yours that is causing me some concern.” For Bob, it is important to have a kind of frame or subject heading for the conversation before he can engage productively. Without that, the extra effort to establish “relational harmony” may be more verbiage and more detail than he wants to absorb at that moment. The chit chat would be inefficient and ineffective.

Let’s say we approach Sally and say: "Hi Sally, how’s it going? You really did get a nice deep blue in that hydrangea. How did you do it?....Your tulips were magnificent this year as well. Any tips for me?.....Now tell me about this tree….” For Sally, the entry dialogue is important: it establishes that they are friendly neighbors, with an interest in a win-win solution, which is her “frame” for a problem-solving negotiation about the tree.

Do these findings about the male and female brains change the way we negotiate in business? No and Yes.

No -- Establishing rapport and trust are critical parts of any negotiation, whether your counterpart is the same gender or not. And that rapport typically depends on a conversation which helps uncover shared interests.

And Yes – Style matters, and a master negotiator adopts strategies that will be most effective with the style of his/her counterpart. Establishing rapport is critical, but it doesn’t have to be the opener.

The real value of our workshop participant’s rule of thumb is that it gives us one simple tip to take with us on the road: plan your approach; sequence and timing matter.

Negotiating Tip

Path to enduring agreements: build trusting relationships; share interests; create value as you address interests; distribute that value.


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The Birth of Win-Win Negotiations

By Thomas Wood

My colleague blogged about Guanxi last month, the age-old concept that we teach in our Best Negotiating Practices workshops. Her post on Guanxi (Get in Touch with Your Guanxi) reminds me of the man who turned Guanxi into a mathematical formula. 

            

In the 1950s, John Nash took the idea of Guanxi -- that caring about the relationship is as important as the outcome -- and applied it mathematically. Years later Nash won a Nobel Prize for his work. Nash suffered from acute chronic schizophrenia most of his career, and as a young prodigy was obsessed with coming up with an original idea. But did he?

Up until this point, most negotiations in the West were focused on the deal – the outcome – the conditions. What did John Nash introduce as an “original” idea? Relationships matter.

Are relationships new to win-win? No! Ancient cultures have valued relationships for thousands of years. John Nash borrowed the concept of Guanxi to support his theory. What is new is that John Nash and his colleagues proved that a win-win result is predictable and repeatable.

John Nash demonstrated that the then predominant theory of economics – Adam Smith’s premise that individual ambition serves the common good and that the best result comes from everyone doing what’s best for himself – was not complete. Nash showed that the best result comes from everyone in the group doing what is best for himself AND the group. You have to factor in all the relationships and connections – you and your stakeholders, they and their stakeholders. You also have to understand what people need with regard to both ego and outcome. You can get the full effect of Nash's theory from the acclaimed 2001 movie A Beautiful Mind.

When you take these factors into account, you reach a result that benefits all – that’s win-win. And how do you get there? With collaborative interest based negotiation strategies, starting with a healthy dose of Guanxi. Some in the West call this the birth of win-win, because it set us on a new course of negotiation mastery and success, as well as paved the way for successful negotiations with cultures more astute at negotiating.

Negotiating Tip

Summarize early and often.


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Negotiators, Get in touch with your Guanxi

By Marianne Eby

Our clients do extensive business in China, where negotiations tend to be a long involved process. What you thought would be a simple business negotiation often turns into multi-day affairs with many delicious meals, multiple toasts, and tours around the factory. While it takes time, this focus on Guanxi, which roughly translates to “relationships and connections,” is viewed as both effective and efficient in China. Good negotiators everywhere would do well to take a lesson and get in touch with their Guanxi.

The Chinese view their business relationships as cooperation amongst various parties that support each other towards mutual gain, where “business favors” or concessions are readily and voluntarily given, knowing that business partners would also be ready to give. Guanxi is a complex concept that involves respect, reciprocity, and a certain deference to the person with more authority, all in an effort to achieve a mutually beneficial relationship.

One famous story of Chinese relationship building is the story of Microsoft’s growth in China. Urban legend had it that on his first trip to China in the mid 1990s, Bill Gates insulted the Chinese President Jiang Zemin by wearing jeans and only leaving time for a brief visit. The legend had China’s President stating that Mr. Gates would be wise to learn more about Chinese culture, essentially saying that understanding China’s customs would pave the way for better working relationships in the country. This legend of course turned out to be pure myth and was later debunked in the 2006 book, Guanxi (The Art of Relationships): Microsoft, China, and Bill Gates’ Plan to Win the Road Ahead by Robert Buderi and Gregory T. Huang, which explored the success of Microsoft’s software laboratory in Beijing, China. The real story is that Gates and one of his key visionaries, Nathan Myhrvold, executed a strategy that set the company and the country on a long term course to build a mutually beneficial relationship by harnessing the talent from within China and learning the cultural knowledge necessary to be successful.

According to Buderi and Huang in Guanxi and the Art of Business, “So far, the company has invested well over $100 million and hired more than 400 of China’s best and brightest to turn the outpost into an important window on the future of computing and a training ground to uplift the state of Chinese computer science – creating dramatic payoffs for both Microsoft and its host country….” China is reaping the benefit of an elite corps of computer scientists, while Microsoft’s barriers to entry were eased.

The legend, the truth, and also the ultimate success of Microsoft in China demonstrate an important lesson: doing business requires understanding the culture of your counterparts and making an effort to build relationships in the ways that are important to them.

Negotiations in western cultures proceed at a speedy clip more often than not, but relative to the speed and cultural nuances, there is always a need to invest in the relationship. Building a strong connection up front with your supplier, customer or partners provides an invaluable foundation of trust and connection that supports all future negotiations in the relationship. Get in touch with your Guanxi!

Negotiating Tip

Decide early as you prepare for an important negotiation, does the situation call for you to compete, collaborate, compromise, avoid or accommodate. All strategies have a time & place.


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Can you negotiate with someone who doesn’t seem to know how?

By Thomas Wood

What if someone you are dealing with seems unable or unwilling to negotiate? You sense that, for personal or cultural reasons, or because of inexperience, they don’t warm to, or recognize, your attempts to open negotiations. Do you give up?

This was the question that came over our Need Help Now web advice service, in which one of our workshop participants was was dealing with a new buyer at a key customer. Often we see a disinclination to negotiate from very smart technical people, such as scientists, technologists (techies, IT, programmers), and engineers. We also see it in the helping professions (researchers, nurses, doctors, laboratory technologists). It applies equally to someone who has resources you need, or authority to give you something you want (a promotion, a better assignment, an extension on a deadline). Your assessment of the “negotiation environment” tells you that despite your counterpart’s inexperience or unwillingness when it comes to negotiating, a collaborative negotiation would indeed yield a great outcome for both sides.

Let’s start with the absolute DON’Ts:
1. Don’t ask them to ‘negotiate’ with you. Such an approach runs the risk of raising red flags and making them nervous. If they feel intimidated, they will avoid further conversation. If they believe negotiating is akin to arguing or win/lose and they are conflict averse, they will either retreat or take a hardball stance.
2. Don’t make any offers (demands, proposals) until they do.

So what do you do?
When dealing with a novice or non-negotiator, try to transform the interaction into one where the other party feels like they are simply having a conversation. Remember, collaborative negotiation is at its heart a conversation, only with a goal of expanding value.

How to begin?
Model the characteristics of a collaborative negotiator:

  • Build in more time for developing rapport and trust. Find a mutual interest, pay a true compliment, find common ground.
  • Prepare more thoroughly. You may need to do some research to find out what your counterpart’s interests are so that you can ask questions that elicit them – he or she might not know the company's needs yet.
  • Probe with care. As always, ask open-ended questions. Show genuine interest and listen carefully to the answers. Ask follow-up questions that make it clear you were listening. Discover their interests, needs and goals.
  • Talk in term of WE. Focus on creating a cooperative discussion, using the word “we.” (“I think we agree the timetable is important; let’s talk about how we can make that happen.”)
  • Paint a picture of a possible collaboration, proposing options and possibilities without commitment. Say “what would it look like if we….”

The idea is to uncover their interests and fears, to gain their trust, and help them see how you can arrive at a “win-win” solution. If you do that, you may find yourself developing a joint agenda and moving into bargaining without your uneasy counterpart ever realizing they are negotiating.

Negotiating Tip

When negotiating via email, establish rapport first: start with a telephone call or web conference. Even better, if possible, start with a face-to-face meeting.


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Unilateral disclosure in negotiations — foolish or enlightened?

By Thomas Wood

When you disclose valuable information to your negotiation counterpart, you want equally valuable information in return. Right? Not always. Sometimes what you seek in return is a new level of trust – that will lead to getting more information and ultimately, trades that create value. Sometimes "one-way" is "two-ways".

Consider these situations:
  • Have you ever begun talking to a negotiation counterpart where sufficient trust hasn’t yet developed?
  • Are you facing negotiations where the trust previously established has been damaged?
  • Are you asking to re-negotiate an agreement as a result of changed market conditions that were not originally anticipated?
In these types of situations, you need to build (or re-build) trust in the relationship. Without the appropriate level of trust, parties are not likely to share their interests, and without discovery of interests, you are left only to argue positions, without much hope of creating value for both parties.
 
One trust-building strategy is to unilaterally disclose confidential or proprietary information that is valuable to your counterpart. (Obviously the disclosure has to be legal, ethical and appropriate to the circumstances.) You are taking a calculated risk that your disclosure will build trust and thereby assure progress in the negotiations.
 
What information should you disclose? The information should be of low risk to you but of significant value to your counterpart. This strategy only works if it is clear to your counterpart that you shared something you didn’t have to, and if the information is something your counterpart values knowing.
 
When should you make such a disclosure? The most ideal time is during the Information Exchange stage. You want to learn early on whether your counterpart is negotiating in good faith, or how much work needs to be done to restore trust. Of course, sometimes during the Bargaining stage you realize you have to back up and re-engage in the activities of Information Exchange before proposals that address interests will surface.
 
A very public example comes on this 1 year anniversary of the US disclosure of the size of its nuclear arsenal -- 5,113 weapons, down from its peak at over 31,000 weapons in 1967, a secret long held since the Cold War. Good minds debate the wisdom of this “transparency policy,” but as a negotiation strategy, well, it’s right out of the master negotiator’s playbook.
 
Historically, there is great distrust between those countries with nuclear power and those without it. All nations will be hurt by nuclear war, but those with nuclear power are the main targets. And remember, the US and many other nations are already obligated by treaty to decrease their nuclear arsenals.
 
Let’s check the US strategy for the key markers of a good negotiation strategy:
  • Is trust the goal? The US had a preliminary interest to bring other nations “to the table”, and the risk of that engagement taking years was too great, so trust needed to be repaired/developed quickly.
  • Low risk? The disclosure was low risk because experts had long provided reliable estimates that were very close to accurate. In fact, the experts’ guesses were only off by 18, so revealing the actual number did not put the US at a disadvantage.
  • High value? The value of the information to other nations was great, as it allowed them to justify to their stakeholders that working with the US in global nonproliferation would be met with the transparency they sought.
  • Information Exchange stage? Much preparation had been done, but no new offers were on the table, so Bargaining had not commenced when the US disclosed. The US was in the Information Exchange stage of negotiations, and chose to make the unilateral disclosure at the May 3, 2010 opening of a five-year review of the Nuclear Nonproliferation Treaty. 
The result? Whether such a unilateral disclosure builds trust remains to be seen. The general law of reciprocity would dictate that your counterpart would respond in kind if they too want to build trust in the relationship. If your counterpart does not respond in kind, it’s possible they don’t see any mutual benefit, or have a hidden agenda. This alone is valuable information that indicates you need to be serious about your alternatives. But if they do reciprocate, you have saved months (with nuclear war heads, years) of negotiations and began the open flow of information that can lead to effective bargaining.
 
Going back to our “public event” example, the US ally, UK, followed suit and on May 26, 2010 disclosed that it had a stockpile of 225 warheads. According to Deutsche Welle, the German Foreign Minister acknowledged the power of the US strategy when he said: "It underlines that the US is aware of its responsibility in the disarmament process. From transparency, grows trust - the basic precondition for further disarmament."
 
Can unilateral disclosure backfire? Yes, like all risks, there’s a down side, and an upside. Your counterpart could reveal some valuable information as way to trick you into trusting them. If you suspect such trickery, you are well advised to spend more time in the Information Exchange stage. People who want unjustified rewards are usually not willing to wait for them, hence their motives will become apparent.
 
An example from a Watershed client (names and specifics changed to protect confidences).
 
Our client (let’s call it Acme) had a contract committing it to a $1.5M spend per year and a 3-year contract with a key supplier (let’s call it BT Supplier).  Due to the economic downturn, Acme did not meet its volume commitment in the 2nd and 3rd year of the contract, by 12% and 22% respectively. Acme avoided discussion of the breach, offering only vague promises of a plan to catch up.
 
Acme came to Watershed for help because it wanted to negotiate a new contract with BT Supplier. The problem was that BT Supplier has lost all trust in Acme because Acme did not live up to its commitments and did not handle the situation well.  Acme needed to do something to re-build its credibility and trust. 
 
We worked through several trust-building strategies with Acme, and the company chose a path of unilateral disclosure. Acme decided to invite an engineering team from BT Supplier to a round of R&D meetings. Acme proactively solicited input from the BT Supplier engineers on a series of new products Acme was developing. This would give BT Supplier a significant advantage when it came time to bid the parts for the new products. Most important, however, Acme’s unilateral outreach and sharing of valuable information demonstrated a serious commitment on Acme’s part toward BT Supplier, and was integral to re-building trust between the parties.
 
Trust Building Strategies are legion. Trust, of course, is fundamental to the success of collaborative negotiations. There are, however, many ways to build trust with your negotiating counterpart. Unilateral disclosure of valuable information is only one such strategy, but it can be a powerful ally in certain situations.
 
Foolish or enlightened? You decide.

Negotiating Tip

Understand, access and address real interests and concerns – that is focus on WHY they want what they want, NOT on demands or positions. 


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