On October 30, the Walt Disney Company made a bold leap into the world of fantasy movies with its surprise announcement that it was acquiring Lucasfilm, home of the immensely successful Star Wars brands, from its founder, George Lucas, for $4.05 billion, split evenly between stock and cash. Lucas is the sole shareholder of his company.
Firm reliance on the integrity, ability, or character of a person or thing. See Also: Relationship Rules and Business Negotiations, Dealmaking: Don’t Wait for Them to Blink, ISIS, International Negotiation, and a Refusal to Communicate.
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Executives rarely view themselves as diplomats. Rightly or wrongly, diplomacy evokes images of frivolity – days spent wandering exotic capitals, nights spent cruising embassy cocktail parties. Sure, both diplomats and executives negotiate, but an ambassador doesn’t have to worry about protecting the company’s bottom line or losing a deal to a competitor.
Yet it would be a mistake for those in the corporate world to dismiss the diplomatic realm so quickly. After all, diplomacy is the art of creating and managing relationships among nations. As such, it offers valuable tools for all business negotiators, who themselves are in the business of creating and managing relationships among companies – whether they view this as their overall goal or not.
Imagine that you’re the CEO of a sports clothing manufacturer based in Chicago. You recently traveled to Amsterdam, the Netherlands, to meet with a distributor who has a rich and diverse network in the European sports market.
During the business trip, you both express enthusiasm about the possibility of a joint venture and agree to give the potential alliance more thought.
Back home, you learn that one of your competitors has discussed similar plans with the same distributor.
Sometimes the question of how to negotiate can be more hotly debated than the issues that come up during the negotiation itself. Who should be involved in making key decisions? Should the negotiation process be public or private? How can parties ensure that all involved feel they’ve had a voice?
The Program on Negotiation has identified three basic sets of circumstances in which you’ll be better off tapping an agent to take your place at the bargaining table (at least for part of the negotiating process).
Microsoft CEO Satya Nadella found himself in the hot seat in October after telling women attending the Grace-Hopper Celebration of Women in Computing that the best way to effectively negotiate for a raise is not to ask for one at all. Asked by Harvey Mudd College President and Microsoft Board Member Maria Klawe for advice on negotiating for a higher salary, Nadella said, “It’s not really about asking for the raise, but knowing and having faith that the system will actually give you the right raises as you go along.” He suggested that women could expect to be financially rewarded thanks to “good karma.”
The parents of a toddler were interested in finding a babysitter to work one or two nights a week. The couple was very happy with their daytime nanny, but they thought she would not be interested in staying past six p.m., since she was young, and they assumed she had an active social life. But when the nanny found out that her employers had hired a new sitter to work occasional evenings, she was disappointed. She had been looking for extra work, as she and her fiancé were saving up for their wedding, and she wondered why the couple had not approached her first. The parents, meanwhile, had to spend time getting their child comfortable with the new sitter—who ended up moving away after just a couple of months.
Suppose you want to hire a mediator to help you resolve a conflict that you’re having with an individual or a company, but for various reasons, meeting face-to-face would be difficult.
Perhaps you and the other party are located in different geographic areas. Maybe your dispute originated in an online transaction, and you’ve never even met. Or perhaps one of you feels threatened or intimidated by the other and is reluctant to meet in person.
Whether to grade student role-play performance, process and outcomes is a tricky question. Jim Lawrence, a long-time PON contributor, simulation author, attorney and practicing mediator with Frost Brown Todd LLC, recently shared his thoughts on the value and purpose of grading students participating in negotiation simulations.
The fallout from Iceland’s financial crisis offers a case study in dealing with those who have suffered a significant blow to their self-esteem. In late 2008, Iceland teetered on the edge of bankruptcy following the collapse of its three largest banks. Since becoming independent of the government in 2002, the banks had pursued a strategy of borrowing money abroad and offering high-interest loans to online lenders—a strategy that failed spectacularly when the global credit crisis hit. Most notably, investors in the United Kingdom and the Netherlands lost 4 billion euros ($5.8 billion) in the Landsbanki’s “Icesave” Internet savings accounts.
Robert Kraft, owner of the New England Patriots, was by all accounts a major factor in getting the NFL collective bargaining agreement signed earlier this week. To do so, Kraft employed four key negotiation tactics to help the players and owners come to a “win-win” solution.
This expectation of a “domino effect” may be especially likely in international negotiations, where cultural differences and territorial concerns perpetuate an “us versus them” approach. Take the international debate over Japan’s long tradition of hunting whales, a practice that many other nations condemn as barbaric and have tried to halt. In 1986, the United States threatened that it would limit Japanese ships’ access to U.S. fish stocks if Japan continued to allow whaling. Japan did agree to halt whaling, but the U.S. government followed through on its threat nonetheless. Japan resumed whaling the following year under its controversial scientific program.
Business negotiators often complain that although they try to focus on creating value, they run into far too many people on the other side of the table who don’t believe in value creation. Often, they focus exclusively on trying to claim as much as possible for themselves. How should you handle these negotiations?
Because an agent’s incentives are rarely, if ever, perfectly aligned with those of her principal (principal-agent theory), many business negotiators have been burned by agents who put their own interests first. Agents in many fields, for example, have a motivation to close deals quickly – rather than for the best price – and earn quick commissions.
Most of us have had the experience of delivering an apology that fell on deaf ears. When apologies fail to achieve their aims, poor delivery is usually to blame. In particular, if the recipient thinks your apology is less than sincere, she is unlikely to forgive you.
Here are some concrete guidelines for fostering a strong relationship between negotiating partners drawn from The Global Negotiator: Making, Managing, and Mending Deals Around the World in the 21st Century.
Few negotiators can imagine negotiation scenarios more stressful than the kinds of crisis negotiations the New York City Police Department’s Hostage Negotiation Team undertake.
The Program on Negotiation received an article from Jeff Thompson and Hugh McGowan, Ph.D., outlining the techniques and strategies that the New York City Police Department Hostage Negotiations Team employ while dealing with high-stakes, high-pressure crisis negotiation situations.
Jeff Thompson, a NYPD Detective, is a research scholar at Columbia University School of Law and a Ph.D. candidate at the Griffith University Law School in Queensland, Australia. Hugh McGowan is a former commanding officer of the NYPD’s Hostage Negotiation Team, having led the HNT for 13 years. The NYPD Hostage Negotiations team handles more crisis negotiations in one month than most departments do in a year and, in 2012 alone, the department handled 400 such negotiations, one of which was well over 50 hours long and included a team of 17 crisis negotiators.
Business negotiators sometimes face the difficult question of whether to negotiate with someone they believe to be immoral, untrustworthy, or otherwise undesirable as a negotiating partner. In his book Bargaining with the Devil: When to Negotiate, When to Fight (Simon & Schuster, 2011), Program on Negotiation chair Robert Mnookin offers advice on the complex question of whether to negotiate with an unsavory party. The question becomes all the more complex when we would be negotiating not on our own behalf, but representing someone else. Turning to the realm of international negotiations, that issue came to the forefront upon the killing of journalist James Foley by the terrorist group the Islamic State in Iraq and Syria (ISIS) on August 19. In interviews with the New York Times, members of Foley’s family described the confusion and stress they faced when they found themselves virtually alone in trying to negotiate his release. About a year after Foley’s capture in Syria in November 2012, ISIS sent an email to his brother, Michael Foley, that revealed the group wanted money for Foley’s release. A follow-up email demanded about $130 million in ransom and the release of Muslim prisoners from the United States.
Many of us advise others on the job yet fail to plan adequately for this responsibility. Set up a strong relationship by negotiating your role as advisor. Name-calling, backstabbing, and turf wars erupted among President Barack Obama’s civilian and military advisors in 2009, as he tried to devise a strategy for ending the war in Afghanistan, writes journalist Bob Woodward in his recent book, Obama’s Wars (Simon & Schuster, 2010). Granted extensive access to Obama and members of his administration, Woodward depicts a power struggle that caused the president to lash out at his advisors in frustration at times. As Woodward’s book suggests, advisors can be as much a headache as a help.
Is one negotiating style “better” than another? Most research suggests that negotiators with a primarily cooperative style are more successful than hard bargainers at reaching novel solutions that improve everyone’s outcomes. Negotiators who lean toward cooperation also tend to be more satisfied with the process and their results, according to Weingart. At the same time, claiming value and lobbying tenaciously for your position can be equally important negotiation strategies.
In a negotiation, few issues heighten tensions faster than when one party feels that the other party has done something ethically or morally incorrect.
To help professionals prepare for times like this, the Program on Negotiation’s Teaching Negotiation Resource Center (TNRC) offers a variety of negotiation exercises designed to teach participants how to handle disputes that are fraught with ethical issues.
From complicated negotiation strategies to artful subterfuge, conflict resolution games are one of the very best ways to prepare for the challenges of real-world negotiation. Games that employ a Prisoner’s Dilemma structure (where rational parties may not cooperate despite their best interests) enable participants to analyze negotiations, make strategic decisions, and anticipate their counterpart’s next move.
Psychologists have long known that an emotion triggered in one realm—anger over an argument at home, for example—can affect how we behave in a subsequent situation, including a negotiation. Such incidental, or unrelated, emotions might influence how fully we trust someone or how much we’re willing to pay for a product. Incidental emotions can even continue to affect our decisions when we’re in a more neutral state, according to new research by professors Eduardo B. Andrade of the University of California at Berkeley and Dan Ariely of Duke University.
In the aftermath of events ranging from the Catholic Church’s child sexual abuse scandal to the 1994 Rwandan genocide, victims have received apologies from those who caused or perpetuated their suffering. Yet those who have been harmed are not always willing or able to forgive. In the context of business negotiations, when a counterpart apologizes for harming or offending you, should you forgive and move forward? What if doing so seems impossible?
What do a Nobel Peace Prize recipient, the CEO of an international financial advisory firm, and the former United States ambassador to the United Nations have in common? They’ve all received the Great Negotiator Award.
Every year, the Program on Negotiation at Harvard Law School bestows this prestigious honor on distinguished leaders whose lifelong accomplishments in the field of dispute resolution and negotiation have had compelling and lasting results.
When someone issues a threat or an ultimatum, take a step back and diagnose the problem. Consider how you would respond to threats and ultimatums such as these during negotiation. In the face of such tough talk, should you strike back with a counterthreat? Probably not. Because counterthreats raise the emotional temperature of a negotiation, they will get you even further off track. Instead, immediately after hearing a threat (or just after you issue one yourself), call for a break.
Imagine yourself in each of these three negotiation scenarios. In each of these scenarios, negotiators are dealing with an issue related to trust. The travel writer discovers he put too much trust in the translator’s reliability. Most of us approach negotiations with the hope that we will share information, build a relationship, and be treated fairly by our counterparts. But once talks get started, most of us have also had the experience of holding back information, viewing the other side’s behavior with suspicion, and feeling distrusted by them.
To turn up the heat on opponents, negotiators sometimes advertise their grievances.
Here’s negotiation skills advice on when it’s a good idea to be vocal—and when to keep talks private.
The decision seemed nonsensical.
Early on the morning of March 7, 2010, with the Academy Awards telecast just hours away, the Walt Disney Company pulled the signal on WABC, its New York–area station. Residents in the New York area awoke to learn they might have to scramble to watch the Oscars via satellite at bars or friends’ homes.
Most business negotiators understand that by working collaboratively with their counterparts while also advocating strongly on their own behalf, they can build agreements and longterm
relationships that benefit both sides.
During times of economic hardship, however, many negotiators abandon their commitment to cooperation and mutual gains.
Instead, they fall back on competitive tactics, threatening the other side with “take it or leave it” offers and refusing to accept concessions of any kind.
During the past several years, one scandalous story of unethical behavior after another has made headlines: Countrywide’s and AIG’s risky business practices, trader Bernard Madoff’s Ponzi scheme, and former Illinois governor Rod Blagojevich’s alleged attempt to sell a U.S. Senate seat. As instances of people behaving badly proliferate, some commentators have wondered if we are experiencing an epidemic of immorality.
Madoff and Blagojevich seem to represent extreme cases on the fringes of human behavior—a couple of very bad apples. In fact, new psychological research suggests that most of us experience ethical lapses under certain conditions. But rather than knowingly causing harm, as Madoff did, we are more likely to unintentionally violate our own moral code.
In negotiation, even minor instances of immoral behavior could damage your reputation and your organization’s as well. Here we present three common ethical pitfalls and suggest ways to police yourself and your counterparts.
On June 19, Republican Representative Thomas Massie of Kentucky, a libertarian, teamed up with two liberal Democrats, Zoe Lofgren of California and Rush D. Holt of New Jersey, to push through an amendment that places new prohibitions on the National Security Agency and the CIA’s surveillance operations, including barring the agencies from engaging in warrantless collection of Americans’ online activity, the Times reports.
On July 7, Eduard Shevardnadze, foreign minister to Mikhail Gorbachev and a driving force behind the perestroika era in Russia, died in his native Georgia at the age of 86.
In June 1985, Shevardnadze—then a lifelong Communist official with no diplomatic experience—was reportedly taken aback when his old friend Gorbachev asked him to take charge of the USSR’s foreign policy, the New York Times reports.
Working together, the two men overhauled Soviet foreign policy—pulling the USSR back from its calamitous war in Afghanistan, negotiating nuclear arms treaties with the United States, permitting the reunification of Germany, and opening up discussions of human rights issues.
Whether you’re purchasing a new home or car, or negotiating a discount on an inventory purchase for your firm, the art of haggling enables negotiators to make a strong claim for their share of the pie. Here are six tips from the Negotiation Briefings newsletter to help you start becoming a better at haggling in business negotiations.
On June 30, compensation expert Kenneth R. Feinberg unveiled a plan to give restitution to victims of accidents related to the fatal ignition flaw in 2.6 million General Motors vehicles. The plan—designed to be as generous as other compensation plans Feinberg has overseen, including payouts to victims of the 2013 Boston Marathon bombings—is part of GM’s efforts to restore public trust and reduce the number of costly lawsuits it could face, Hilary Stout reports in the New York Times. GM had faced heavy criticism for failing to disclose the defect for more than a decade.
The plan guarantees at least $1 million for families of those who died in accidents caused by the ignition problem. A calculation of the deceased’s lifetime earnings plus $300,000 for a spouse and for each dependent will be added to the $1 million payout. People who received life-altering catastrophic injuries as a result of the ignition defect could earn more, and those who received minor injuries can also be compensated for medical fees.
“General Motors basically has said whatever it costs to pay all eligible claims, they will pay it,” said Feinberg.
Two stories emerged in the news this month that illustrate polar opposite attitudes toward negotiating salary and benefits in the workplace.
First, a New York Times profile revealed that Ira Glass, the creator and host of the popular radio show “This American Life,” is highly uncomfortable earning a high salary. In recent years, Glass earned about $170,000 in compensation and benefits. In 2013, the board of WBEZ public radio—his show’s producer—raised that figure to $278,000 to bring it in line with his stature and success.
Glass felt “weird about it,” he told Cara Buckley of the Times. In fact, he felt so weird about the
increase that he asked the board to lower his salary the following year to $146,000. “Then this year, I asked to lower it again,” he wrote in an email to Buckley, adding, “It’s still a lot of money.”
Two art museums have been at the center of disputes involving their host cities, Detroit, Michigan, and North Miami, Florida. In both cases, the question of who owns the museums’ collections and the museums themselves is at stake. Also in both cases, the interested parties have turned to mediation to break the impasse.
Beginning in Detroit, the city’s bankruptcy put the world-class collection of its art museum, the Detroit Institute of Arts (DIA), in jeopardy. Though the DIA is operated by a nonprofit organization, its valuable collection is owned by the city, a fact that puts it in jeopardy.
Some Detroit creditors have argued that part of the collection should be sold off to help address the city’s $18 billion in pension and other liabilities, writes the New York Times. But local leaders and museum officials have rejected this idea, arguing it would be short-sighted and demoralizing for a city that is attempting to rebuild itself after a devastating fall.
Suppose that two businesses have similar sounding names. The similarity is confusing to customers, or could be down the line. One of the businesses decides to do something about it. How can they engage in a successful dispute-resolution process?
Two recent conflicts over business names went in different directions. First, a public dispute broke out last year between blogger and writer Bunmi Laditan, creator of the satiric blog and book franchise “The Honest Toddler,” and the Honest Company, an eco-friendly baby-products brand owned by actress Jessica Alba. Laditan started the Honest Toddler in 2012 as a Twitter feed, ostensibly run by an incorrigible youngster offering unsolicited parenting advice. Laditan filed a trademark application for the Honest Toddler name in September 2012. The Honest Company, which also launched in 2012, purchased the Internet domain name honesttoddler.com in March of that year.
The recent exchange between the United States and the Taliban of Sergeant Bowe Bergdahl for five Taliban leaders held at Guantanamo Bay, Cuba, represented the first public prisoner exchange of a US soldier in the thirteen year US involvement in Afghanistan. The background of the deal including how Private First Class Bergdahl (promoted twice to Sergeant while in captivity) entered Taliban control, how the deal was crafted and executed, and what it means for the future have rapidly come forward in bits and pieces through media channels.
What is currently missing in the existing commentary is a holistic negotiation analysis. A negotiation analysis applies negotiation frameworks and theory to better understand the events that have taken place and the unfolding debates, and can provide insight into future negotiations. It also enables understanding by using a template that includes stakeholders, core interests, deal set-up and components, execution, and post-deal debate and legacy to allow for a focused discussion.
On May 30, the National Basketball Association (NBA) announced it had approved former Microsoft CEO Steve Ballmer’s record-breaking $2 billion offer to buy the Los Angeles Clippers from Shelly Sterling, wife of Clippers owner Donald Sterling. In April, the NBA banned Sterling from the league for life after racist remarks he made during a phone call were made public.
Negotiations to buy the Clippers were fast and furious. Aware that the NBA Board of Governors could have voted to terminate both of the Sterlings’ ownership interests at a meeting scheduled for June 3, Shelly Sterling was eager to sell the team before that date and reportedly was authorized by her estranged husband to negotiate on his behalf. As part of the sale agreement, Shelly Sterling and her family’s trust promised not to sue the NBA and to absolve the league of litigation filed by others, including her husband. Donald Sterling, meanwhile, filed a $1 billion lawsuit against the NBA the day his wife’s deal was announced.
Choosing the right words for your contract is a negotiation in itself. Five guidelines will help you achieve greater precision.
When negotiators sign on the dotted line, they sometimes worry about the wrong concerns.
“Did I overpay?” wonders the buyer as he inks the sales agreement.
Across the table, the seller is thinking, “I bet if I’d pushed a little harder, I would have gotten more.”
Yet it’s the words that surround the numbers that often are more important—and harder to get right. Take a simple real-estate deal. Isn’t it better to sell your condo for $400,000than for $375,000? Not if the higher-priced deal is contingent on the purchaser’s sale of her current place. Likewise,the lowest price isn’t necessarily the best for the buyer if it doesn’t include exit provisions for a bad title or termites.
On May 13, Lakhdar Brahimi, U.N. special envoy to Syria, announced that he was quitting his position as lead mediator of the Syrian conflict due to frustration with a lack of progress. The same day, a French diplomat said the Syrian government had used chemical weapons more than 12 times after signing a treaty banning the weapons, according to the New York Times.
“It’s very sad that I leave this position and leave Syria behind in such a bad state,” Brahimi told reporters.
He was the second high-level mediator to abandon the conflict. In 2012, former United Nations Secretary-General Kofi Annan gave up his efforts to negotiate an end to the civil war after Syrian President Bashar al-Assad’s government failed to implement the six-point plan that Annan had negotiated between the government and opposition leaders.
In their training, police and professional hostage negotiators are taught skills that will help them defuse tense situations over the course of long phone calls, such as engaging in active listening, determining the person’s emotions from his or her inflection, and trust building.
These crisis negotiators are being put to the test by young criminal suspects and others in crisis, whose first instinct increasingly seems to be texting rather than talking, according to an Associated Press article.
Red Bank, Tennessee, police chief Tim Christol tells the Associated Press that the usual negotiation skills he teaches don’t translate to texting, such as emotional labeling in the form of a statement such as “You sound angry.” Without verbal cues, Christol says, it becomes much more difficult to understand the emotional state of the person in crisis, and misunderstandings are common. “Words are only 7 percent of communication,” he says.
On April 9, Israel said it was “deeply disappointed” by remarks by Secretary of State John Kerry that seemed to primarily blame Israel for the current breakdown in U.S.-mediated Middle East peace talks, as reported in the New York Times.
Last July, the United States brought Israel and the Palestinians back together for a series of talks set to span nine months. Each side set a condition to sitting down and staying at the table: Israel pledged to release 104 Palestinian prisoners in four groups over the course of the nine months, and the Palestinians vowed not to join any international bodies during this time.
But the talks eventually became bogged down over borders, security, the future of Jerusalem, the fate of Palestinian refugees, and other issues, the Times reports.
Just one week after David Letterman revealed his decision to leave his long-running talk show, the Late Show with David Letterman, CBS announced that comedian Stephen Colbert would be his replacement. The negotiations surrounding the changing-of-the-guard were remarkably business-like and calm for the tumultuous world of late-night television.
Letterman debuted his show Late Night in 1982 and then switched to CBS in 1992 following a contentious battle with Jay Leno for Johnny Carson’s chair at the Tonight Show. Letterman’s voluntary decision to retire comes on the heels of Leno’s forced retirement from NBC, which replaced him with Jimmy Kimmel while his ratings were still healthy.
Negotiation experts typically advise us to meet with our counterparts in person whenever possible rather than relying on the telephone or Internet. As convenient as electronic media may be,they lack the visual cues that help convey valuable information and forge connections in face-to-face talks. Without access to gestures and facial expressions, those who negotiate at a distance have trouble accurately reading each other’s tone and building rapport.
But what, exactly, do negotiators learn from nonverbal behavior? Dowe read each other’s gestures and expressions accurately or not? Can we increase our negotiation success by deliberately modifying our own nonverbal behavior? Here we analyze three scenarios to help you understand how nonverbal behavior may be affecting your negotiations.
This three-step approach to managing process issues in negotiations will reap significant rewards at the bargaining table.
In February, the news that Facebook would pay an astounding $19 billion to acquire text-messaging start-up WhatsApp caused jaws to drop across the tech world and beyond.
Jan Koum, a Ukrainian immigrant, and his friend Brian Acton launched WhatsApp in 2009 with the goal of creating a text-messaging application that would connect users with family and friends abroad at a low cost. Since its inception, WhatsApp has been ad-free. It now has 450 million global users who pay a 99-cent annual fee for this service.
In the face of antitrust charges, Google’s new guiding principle is “Don’t litigate, negotiate,” according to the Wall Street Journal.
In recent years, U.S. and European regulators have accused Google of abusing its dominance in online searches by promoting its own services, such as Google Shopping, at the expense of its competitors’ services. Rival comparison-sites such as Nextag complain that Google lists their products far below Google Shopping results, where they are less likely be found, in consumer searches.
The concept of emotional intelligence burst into the cultural imagination in 1995 with the publication of psychologist Daniel Goleman’s bestselling book of the same name. Experts have predicted that scoring high on this personality trait would boost one’s bargaining outcomes. After all, the qualities that characterize emotional intelligence—awareness of our emotions and how they affect others, the ability to regulate our moods and behavior, empathy, the motivation to meet meaningful personal goals, and strong social skills—seem as if they’d help us get what we want from others and find common ground.
Should emotional intelligence be included among the most essential negotiation skills? In a new study, researchers Kihwan Kim (Buena Vista University), Nicole L. A. Cundiff (the University of Alaska, Fairbanks), and Suk Bong Choi (the University of Ulsan, South Korea) sought to determine whether emotional intelligence correlates with beneficial negotiation outcomes, namely trust building, the desire to work together in the future, and joint gain.
In a hypothetical raise negotiation [LINK], suppose you find out that your peers have told your boss disparaging and blatantly untrue stories about your interactions with customers.
You feel shocked and upset by their betrayal; you always believed that you had a good relationship with you coworkers. It never crossed your mind that they would attempt to sabotage you, particularly because of your high status in the department.
Whether out of jealousy or a sense of injustice, less powerful parties will do whatever it takes to see their more powerful counterparts fail. Unfortunately, powerful parties often are unaware of their counterparts’ animosity.
In China this April, Apple CEO Timothy D. Cook made the unusual move of apologizing to Chinese customers for his company’s warranty policy and promised to make amends, the New York Times reports.
On March 15, International Consumers’ Day in China, the nation’s largest state-run television network criticized Apple for giving iPhone customers in China a short warranty and for charging consumers to replace faulty back covers on iPhones. Apple products are immensely popular in China.
2013 witnessed a series of colorful mergers, acquisitions, and other deals. Here are 10 negotiations and negotiation trends from which business dealmakers can learn.
On November 29, 2011, the same day American Airlines filed for bankruptcy, US Airways CEO Doug Parker called American head Tom Horton to discuss a possible merger. Horton rebuffed Parker, saying airline needed to spend time reorganizing and renegotiating its labor contracts before focusing on a deal, the Wall Street Journal reports.
When you know little about the asset at stake or the context, it makes sense to hire experts to do your negotiating for you—as long as you carefully monitor their work, align their financial incentives as closely as possible with your interests, and question their advice.
A number of noteworthy disputes among businesses, organizations, and individuals made headlines in 2013. We point out the negotiation angles behind stories first reported by the New York Times, the Wall Street Journal, and other media outlets. Keep an eye out for these common themes: hardball tactics that backfire, costly legal battles that could have been avoided, and disputes over poorly worded contracts.
In 2009, when Chrysler on the verge of financial collapse, the Treasury Department negotiated a swift solution to save it from extinction. Chrysler would go into bankruptcy, and then its ownership would be divided up, with the majority going to a Chrysler union workers’ health-care trust, 20% to Italian automaker Fiat, 10% to the U.S. Treasury Department, and 2% to the Canadian government. Chrysler also gave a $4.59 billion note to the health-care trust to eliminate the company’s future health benefit obligations to retirees. And Fiat negotiated a plan to eventually acquire all of Chrysler by gradually buying the health-care trust and the U.S. government’s stake in Chrysler.
In his best-selling novel Blink, Malcolm Gladwell scans the psychological literature and uncovers fascinating nuggets of knowledge.
He describes people who can assess the integrity of a work of art within seconds, predict the likelihood that a couple will get divorced based on a short conversation, and assess their romantic interest in another on a “speed date.”
Documenting numerous stories in which split-second decisions, or “blinks,” led to successful outcomes, led to successful outcomes, Gladwell concludes that rapid cognitions can be as effective as more deliberate and thoughtfully made decisions.
Some might argue that confrontation is inevitable. But a wide range of collaborative efforts around the country have shown that it can be avoided.
How can negotiators find their way into the trading zone quickly and easily?
One proven method is joint fact finding.
Joint fact finding is a multistep, collaborative process for bringing together negotiating partners with different interests, values, and perspectives. Here are the five stages through which joint fact finding typically proceeds.
A Q&A with Michael Wheeler, author of The Art of Negotiation: How to Improvise Agreement in a Chaotic World.
We recently interviewed Michael Wheeler, HBS Professor and PON faculty member, about his critically acclaimed new book, The Art of Negotiation: How to Improvise Agreement in a Chaotic World. In his latest offering, Wheeler introduces his powerful, next-generation approach to negotiation that takes into account the dynamic, and often uncertain, nature of negotiations.
When choosing a mediator, keep in mind that you need not accept the proposals that he makes. In other words, you have total power to prevent mediation from leading to undesirable outcome. As a result, the only risk of mediation is that you will spend time and money without reaching agreement. Indeed, one Fortune 100 company that is so firmly convinced of the value of mediation that, as long as the other party seems to genuinely want a good-faith resolution, it will get a list of experienced mediators from a reputable and neutral mediation agency and let the other side select anyone on the list.
When two people share the same motive, they fall prey to the same flaws and reinforce each other’s failings. Consider a labor negotiation in which the chief management negotiator withholds information about revenue projections, while the labor leader holds back details about workforce sentiment. Impasse is the predictable result. When you’re negotiating with a fellow individualist or a fellow cooperator, your goal should be to overcome the inherent flaws of your orientation.
At last, the deal is done. After 18 months of negotiation, eight trips across the country, and countless meetings, you’ve finally signed a contract creating a joint venture with a Silicon Valley firm to manufacture imaging devices using your technology and their engineering.
The contract is clear and precise. It covers all the contingencies and has strong enforcement mechanisms. You’ve given your company a solid foundation for a profitable new business. As you file the contract, a question dawns on you: Now what?
Whether you’re negotiating for yourself or on behalf of someone else, each ethical case you come up against will have its own twists and nuances.
By asking yourself the following questions, you can illuminate the boundaries between right and wrong at the bargaining table and in the process discover your own ethical standards.
In negotiation, a combination of several negotiation skills and tactics may be needed to break past a difficult impasse. A recent protracted negotiation between North Korea and South Korea provides a case study.
In April, North Korea abruptly removed its workforce from the Kaesong Industrial Complex, a joint venture it launched within its borders nine years ago with South Korea. The complex shut down, and the two nations engaged in seven rounds of negotiations over the course of 133 days to try to reach agreement to reopen it.
When you communicate in person, social norms – including body language, manners, and physical appearance – guide your behavior and ease the process. A common environment can facilitate understanding as well. Over the telephone, the speaker’s intensity, speed, and inflection provide useful social information.
As a consequence, face-to-face and telephone interactions generate greater social awareness and greater stability and cooperation than do online interactions.
Relationships are as important to leadership as they are to negotiation.
A relationship is a perceived connection that can be psychological, economic, political, or personal; whatever its basis, wise leaders, like skilled negotiators, work to foster a strong connection because effective leadership depends on it. How you negotiate your relationships with your counterpart not only determines your success at the bargaining table but also your effectiveness as a leader.
Executives are increasingly faced with the task of negotiating in a realm that many know little about: technology.
Whether you’re bargaining over the purchase of a companywide network, coping with the possible infringement of patented technology, or seeking better customer service from a software supplier, technology negotiations have become a fact of managerial life.
How do such negotiations differ from those that are less technologically complex?
In China this April, Apple CEO Timothy D. Cook made the unusual move of apologizing to Chinese customers for his company’s warranty policy and promised to make amends, the New York Times reports.
On March 15, International Consumers’ Day in China, the nation’s largest state-run television network criticized Apple for giving iPhone customers in China a one-year warranty, less than the two years required under Chinese law, and for charging consumers about $90 to replace faulty back covers on iPhones.
Business professionals seeking to improve their negotiation training can learn a great deal from the mistakes made in newsworthy negotiations.
To take one recent example, Steven M. Davidoff of the New York Times’ “DealBook” recently analyzed how the U.S. governments rushed negotiations to save U.S. automaker Chrysler led to a costly long-term problem.
When it comes to negotiation, the more choices on the table, the better your outcomes will be – right? Not necessarily. An excess of options can stand in the way off efficient agreements and, moreover, prevent you from being satisfied with the final result.
It stands to reason that devoting less time to relatively unimportant choices should free you up for more meaningful pursuits and increase your overall satisfaction. But how does the concept of satisficing apply to your most important decisions and negotiations?
The clearest method for achieving exclusivity is an exclusive negotiating period, during which both sides agree not to talk to third parties, even if approached unexpectedly by others. In some arenas, these terms are called no-talk periods.
On May 19, Internet company Yahoo announced that it was purchasing the blogging service Tumblr for about $1.1 billion in cash. The acquisition could put a fresh face on the aging Internet company and provide it with a profitable revenue source—or it could turn out to be another instance of the Web pioneer overpaying for a start-up and failing to nurture it, as was the case after Yahoo bought Flickr and GeoCities.
Like other cognitive biases, competitive expectations can be insidious. Fortunately, there are several steps you can take to forestall their negative consequences.
What do people value when they negotiate?
Research by Professors Jared R. Curhan and Heng Xu of MIT’s Sloan School of Management and Hillary Anger Elfenbein of Berkeley’s Haas School of Business provides useful insights concerning this basica question.
Using survey data collected from everyday negotiators and filtering it through a sorting procedure conducted by negotiation professionals, the researchers developed a Subjective Value Inventory (SVI) that includes four factors.
Preparation. Practice. Persistence. Those qualities make for a good firefighter, and as Nantucket Firefighter Nate Barber learned from working with Harvard Negotiation and Mediation Clinical Program (HNMCP) students, they also make for a good negotiator.
As a member of Nantucket’s Local 2509 of the International Association of Firefighters and a former undergraduate negotiation student at Boston University, Mr. Barber knew relations between the Town of Nantucket’s management and his union could be better. Since the firefighters’ contracts only lasted two or three years and the negotiation process itself often took that long, the union and the management sat down for contract negotiations every year. And every year, the negotiations spilled over into the next year or, if it was the final year of the contract, went to arbitration. This impacted everyone: arbitration provoked more fighting, poorer relations, and less of what everyone wanted. They hadn’t had a mutual agreement for six years. As one of the interested parties, though, Mr. Barber knew he was not the person to fix a broken bargaining system.
Trust may develop naturally over time, but negotiators rarely have the luxury of letting nature take its course. Thus it sometimes seems easiest to play it safe with cautious deals involving few tradeoffs, few concessions, and little information sharing between parties. But avoiding risk can mean missing out on significant opportunities. For this reason, fostering trust on the fly is a critical skill for managers. As Kristen knew, the first step to inspiring trust is to demonstrate trustworthiness. All negotiators can apply the six strategies that follow to influence others’ perceptions of their trustworthiness at the bargaining table.
Here the Program on Negotiation offers a checklist of negotiation design categories. Whether your overall negotiation design is decide-announce-defend (DAD) or full-consensus (FC), or a hybrid of both, raising these issues is usually preferable to falling into a set of important decisions by default.
In any negotiation, you’re likely to have information about the other party or about the deal (industry facts, economic health, new products, and so on) that the other party might not know you have.
When considering a potential mediator, ask the following questions of those who have worked with him in the past.
What to do when you’ve done everything right, but you still don’t have an agreement.
By following these steps in your next negotiation, you’ll improve the chances of meeting everyone’s interests.
A recent article in Tufts Magazine by Program on Negotiation faculty member Jeswald Salacuse discusses an oft neglected aspect of negotiation: putting into action what negotiators agree to at the bargaining table.
Normally negotiators focus on the deal-at-hand as well as those present at the negotiation, neglecting other aspects of the negotiated agreement that would not only impact others outside of the room but also require their cooperation for its success.
Professor Salacuse calls this process of putting a negotiated agreement into action “the toughest challenge” in negotiation.
In past articles, we have highlighted a variety of psychological biases that affect negotiators, many of which spring from a reliance on intuition.
Of course, negotiators are not always affected by bias; we often think systematically and clearly at the bargaining table.
When you’re making important decisions during a negotiation and have the luxury of time, what’s the alternative to Blink?
Should you completely ignore your rapid cognitions?
In the article “Strategies for Negotiating More Rationally,” we described University of Toronto professor Keith Stanovich and James Madison University professor Richard F. West’s distinction between System 1 and System 2 thinking.
System 1 roughly corresponds to Gladwell’s notion of rapid cognitions and System 2 refers to more deliberative thought.
In March 2005, German powerhouse SAP agreed to buy Retek, a small company that offered information management software, for $8.50 a share. The deal included a matching right in which Retek committed to negotiate exclusively with SAP for five days if it received a “superior offer.” The matching right didn’t scare away Oracle, SAP’s archrival, which was convinced that it could integrate Retek’s application software better than SAP could. Oracle offered $9 a share, triggering SAP’s matching right. SAP countered with $11 per share, and Oracle responded with $11.25 per share. SAP declined to match Oracle’s last offer, and Oracle closed its deal in mid-2005.
Although most Americans treat those they know better than they treat strangers, Chinese behavior towards insiders and outsiders tends to be more extreme than in the United States. A guiding principle in Chinese society is guanxi – personal relationships with people from whom one can expect (and who expect in return) special favors and services. Family ties are paramount, but friends, fellow students, and neighbors can also join the inner circle. As a foreigner, you can cultivate guanxi either by hiring people with close ties to your counterpart or by developing your own relationships with key contacts.
In many cultures, alcohol consumption plans a central role in the negotiation process. Members of other cultures, particularly Islamic ones, adhere to strict abstinence; the presence of alcohol may offend these negotiators.
“Separate the people from the problem,” advises the best-selling negotiation text Getting to Yes. That’s certainly good counsel when tempers flare and bargaining descends into ego battles, but it’s a mistake to ignore the psychological crosscurrents in negotiation. Unless they are addressed, a deal may never be reached.
Sometimes those on opposite sides of a bitter dispute can achieve great gains – if only they can spot the ways in which they are similar.
In 2001, the Metropolitan Intercollegiate Basketball Association (MIBA), an organization of five New York-area colleges best known for staging college basketball’s National Invitation Tournament, filed a lawsuit against the National Collegiate Athletic Association (NCAA). MIBA allege that certain NCAA rules governing team participation in preseason and postseason tournaments restricted school’s participation in MIBA tournaments, in violation of various antitrust laws. After four years of litigation, the two parties announced not only that they would settle a lawsuit but also that the NCAA would purchase the rights to the MIBA preseason and postseason tournaments.
Placing Trust in Others
When it comes to trusting others, negotiators often rely on their gut instincts.
Recent studies indicate, however, that extraneous factors can sway such judgments.
For example, Michael Kosfeld and other University of Zurich researchers introduced a twist in a classic trust game in which subjects must decide on how much money to invest when there’s no guarantee that the party playing the “trustee” will return the investment or share the gains.
By following these tips in your next negotiation, you’ll improve your chances of meeting everyone’s interests.
Before you sit down at the bargaining table, imagine a wide-range of options and packages, including some that may seem far-fetched.
When talks begin, remember that getting down to business too quickly can stand in the way of building trust.
Emphasize to your counterpart the importance of separating the “inventing” from “deciding,” as Fisher, Ury, and Patton suggest in Getting to Yes.
Don’t worry about adding complexity. Bringing new issues, options, and parties to the negotiation is likely to create value.
Avoid artificial deadlines, though it can be helpful to decide when it’s time to concentrate on the packages you’ve identified.
How can you uncover additional value, make useful trades, and put together a package that exceeds your party’s expectations? Here are four value-creating moves that all negotiators should add to their toolkit.
Here’s a recap of some of the most interesting and challenging negotiations of 2012.
In any negotiation, you’re likely to have information about the other party or about the deal (industry facts, economic health, new products, and so on) that the other party might not know you have.
How can we avert a full-throttle drive over the fiscal cliff? Despite some promising signs of movement on both sides of the aisle, the current negotiation approach – positional bargaining – is bound to bring us dangerously close to the edge.
In 1901, J.P. Morgan wanted to buy the Carnegie Steel Company from its founder, Andrew Carnegie.
Carnegie was 65 years old and considering retirement. As Harold C. Livesay recounts in his book Andrew Carnegie and the Rise of Big Business (Little, Brown, 1975), when Carnegie finally decided he was ready to sell, he jotted down his estimate of his company’s worth in pencil: $480 million. Carnegie had the sheet of paper delivered to Morgan, who took one look and said, “I accept this price.”
Over-precision doesn’t necessarily lead us to think we’re better negotiators than we actually are. Rather, it causes us to trust our initial instincts too much.
Sometimes we’re actually overconfident that we’ll perform worse than others. This tendency applies to competitive situations, including negotiation.
Those who underestimate their ability to be competitive usually will choose to stay out of a negotiation.
Richard Zeckhauser and Program on Negotiation faculty member Iris Bohnet have found that negotiators leave substantial amounts of money on the table due to betrayal aversion. They conducted experiments in which they compared people’s willingness to take risks in two decision situations. The first situation is a lottery whose outcome is based on chance. Participants must choose between:
The case of Jordan and Israel shows how even countries at war can negotiate a water agreement if it is framed in non-zero sum terms and trust continues to be built over time. And that is not the only case of a treaty that has succeeded against all odds to bridge conflicting water interests; the Indus Waters Treaty between India and Pakistan and the Ganges Water Treaty between Bangladesh and India are other examples.
Zero-sum thinking emerges when people conceive of water as a fixed resource – one provided by nature in a given quantity that is either static or diminishing. Based on these assumptions, diplomats often focus on what share of the existing water will be given to each entity. Negotiations of this type typically involve decision makers who are political leaders focused on preserving sovereignty and maintaining state security. They are often unprepared to think about improving the overall efficiency of water use, which, in effect, can “create” more water.
Scientific and technical knowledge is important in water negotiations, but not in the ways it has often been used. It is counterproductive to use scientific information to justify arbitrary (political) decisions. For example, scientific information about water has increased dramatically over the last several decades, but our ability to manage water resources has not improved proportionately.
When countries face contending water claims, one of the biggest obstacles to reaching an agreement is uncertainty. Specifically, there are three types of uncertainty: uncertainty of information, uncertainty of action, and uncertainty of perception. In part 2 of this 5 part series, Program on Negotiation faculty member Lawrence Susskind explains the uncertainties facing negotiators trying to make agreements.
Most difficulties in water negotiations are due to rigid assumptions about how water must be allocated. When countries (or states) share boundary waters, the presumption is that there is a fixed amount of water to divide among them, often in the face of ever-increasing demand and uncertain variability. Such assumptions lead to a zero-sum mindset, with absolute winners and losers. However, when parties instead understand that water is a flexible resource and use processes and mechanisms to focus on building and enhancing trust, even countries in conflict can reach agreements that satisfy their citizens’ water needs and their national interests.
By following these tips in your next negotiation, you’ll improve the chances of meeting everyone’s interests.
It is the spring of 1997 and I am sitting in Pound 107 while Roger Fisher ’48, Williston Professor of Law, Emeritus, is telling a story about his serving as a weather reconnaissance pilot in World War II. As a teaching assistant for the Negotiation Workshop, I have heard the story at least a dozen times by now and feel my mind wandering. And yet, against my will, as the story reaches its crescendo and the combination punch line/negotiation issue flows from Roger’s lips, I find myself involuntarily leaning forward and, a second later, helplessly bursting into laughter. The note I jot down to myself is: “All of life is about who tells better stories.”
Psychologists Bruce Darby and Barry Schlenker at the University of Florida have defined apologies as “admissions of blameworthiness and regret for an undesirable event.” In negotiation, such undesirable events might include betraying a counterpart’s trust, making a disparaging remark about him, or falling through on a promise.
Despite the bloody conflicts in the Middle East, people of goodwill from both Arab and Western nations earnestly seek to collaborate in diplomatic and business transactions.
Following a violation, negotiators become less cooperative, less trusting, more upset, and more likely to retaliate against the perceived perpetrator. An apology can reverse the damage.
Some researchers have found that the most effective type of apology depends on the nature of the mistake made.
In a study by Peter Kim of the University of Southern California, Cecily Cooper of the University of Miami, Kurt Dirks of Washington University, and Donald Ferrin of Singapore Management University, participants assumed the role of a manager responsible for hiring a senior level tax accountant. The participants watched one of four videotaped interviews of a hypothetical job candidate. During each video, the interviewer mentioned that the candidate’s previous employer had accused her of filing a tax return that understated the client’s capital-gains income. In one version of the video, the interviewer suggested that the candidate incorrectly filed the tax return because she is incompetent – she didn’t understand the mistake she made. In another version, he accused her of deliberately underreporting the earnings.
How can organizations capitalize on negotiation experience? Through reflective practice: the process of considering the results of each negotiation in light of initial expectations and then discussing what ought to be tried next. While each negotiator must take initiative for reflective practice, to truly learn from experience, most need continual coaching from mentors.
Imagine that you and a colleague get in an argument about the layout of a final report in front of a coworker you both like. Now suppose the same argument occurs in front of someone your colleague likes but you do not or vice versa – in front of an ally who is your colleague’s foe.
What are social psychologists learning about the connections among emotions, negotiation, and decision making? Negotiation contributor Jennifer S. Lerner of Harvard Kennedy School and her colleagues have identified two critical themes. First, they have studied the carryover of emotion from one episode, such as a car accident, to an unrelated situation, such as a workplace negotiation.
Second, these researchers are studying the influence of specific emotions such as happiness, sadness, and anger on decision-making.
Sometimes negotiators get off on the wrong foot. Maybe you and your partner had a different understanding of your meeting time, or one of you makes a statement that the other misinterprets. Such awkward moves at the beginning of an interaction can lead one party to question the other side’s motives.
In a recent article, Robert Lount, Chen-Bo Zhong, J. Keith Murnighan, and Niro Sivanathan, all of the Kellogg School of Management at Northwestern University, examined trust building in negotiation.
How is it that mediators – who themselves lack any power to impose a solution – nevertheless often lead bitter disputants to agreement? Substantive expertise helps, as does keen analytic skill.
According to a recent survey by Northwestern University law professor Stephen Goldberg, veteran mediators believe that establishing rapport is more important than employing specific techniques and tactics.
I want to make four simple points regarding corporate social responsibility and mineral extraction in Colombia. I presented these ideas several weeks ago at a Harvard Law School seminar sponsored by the Colombian government. We had senior officials present along with a great many Colombian graduate students studying at Boston-area schools. I think these prescriptions apply globally, but they are especially relevant in Latin America.
Corporate Social Responsibility (CSR) provides a new point of entry for those concerned about the social and environmental impacts of mineral extraction.
On May 14, Susan Hutson, the independent police monitor for the city of New Orleans brought together community stakeholders and police officials to help formulate a program that would allow police officers and citizens to mediate minor disagreements, the New Orleans Times-Picayune reports. Aided by a professional mediator, citizens and officers would sit face to face with the goal of resolving citizen complaints of police professionalism and courtesy violations, according to Ursula Price, spokeswoman for Hutson’s office. Hutson hopes to launch the fledgling program, which is not yet funded, in 2014. Committee members, including representatives from various community and criminal justice groups, are charged with planning and implementing the program.
In her book, The Mind and Heart of the Negotiator, Leigh Thompson cites four widely held myths that bar negotiators from improving their skills. This analysis is worth the attention of anyone who wants to move beyond platitudes to a deeper understanding of negotiation.
Myth 1: Great negotiators are born.
While we’re all born with varying abilities for almost any skill that can be imagined, our social environment and education have a tremendous impact on what we achieve. Negotiations professors recognize that executives enter the classroom with different capabilities. They also understand that all students can gain confidence and competence. The belief that one is either born a great negotiator, or not, can stand in the way of learning.
Why do some people get under our skin? Something they do or say pushes our hot buttons. Annoyance doesn’t foster productive negotiation, of course, but it’s not our fault that they’re getting on our nerves. Or is it?
Psychologists caution that when we have strong visceral reactions to other people, we should examine our own feelings and attitudes, not just theirs. If we’re honest with ourselves, we may recognize in other people’s behavior the dark side of our own nature.
Barbara Gray, professor of management and organization at Pennsylvania State University, calls this internal demon our nemesis. It’s always lurking inside us, ready to pounce.
Negotiators can find themselves talking past each other for hours, even days. Then suddenly something happens – a breakthrough. The parties begin conversing on a different plane, one that reveals solutions to problems that had seemed intractable.
The hardest step in negotiation is often the first. Costly lawsuits can drag on it everyone is afraid to be the first to blink. Prospective buyers and sellers can waste endless hours dancing around a possible deal. And in collective bargaining, labor and management teams sometimes paint themselves into corners by refusing to negotiate “matters of principle.”
If you’re in the middle of talks that seem to be going well, here’s a warning: consider the impact of the agreement on those who aren’t at the table, or suffer the consequences. That’s a lesson that Apple and some of the largest U.S. book publishers are currently learning the hard way.
On April 12, the U.S. Department of Justice (DOJ) sued Apple and five major U.S. publishers for colluding to raise the price of e-books during secretive, anti-competitive negotiations. Three of the publishers have settle the suit; two others and Apple have so far been unwilling to settle.
The teacher’s federation has qualms with the current education bill’s stipulations regarding the scheduling and terms for mediation between the federation and provincial government. The government is open to further negotiations, but refuses to offer more money. Susan Lambert, president of the British Columbia Teacher’s Federation, asserts that the government is acting in bad faith, claiming the “whole process is a mockery of fair play…There is a predetermined outcome that requires us to be complacent in stripping out of our collective agreement rights that [the employers tried to take out] at the bargaining table, rights that took a long time to negotiate.” Could mediation unlock value between these parties that was previously left untouched, even though one side has little faith in the process?
Tucked away in an idyllic corner of Maine is a summer camp that features many traditional American activities: singing around bonfires, flag raising ceremonies, Color Wars, and chilly dips in the lake. Less ordinary, however, are the daily dialogue sessions, where Israeli and Palestinian campers heatedly discuss their identities, homelands, politics, and pain.
Meet Seeds of Peace, the organization that runs this one-of-a-kind camp – and our client organization for a very unique clinical project. We – Krystyna Wamboldt (JD ’12), Rachel Krol (JD ’12), and Professor Robert Bordone (JD ’97) – partnered with Seeds of Peace to lead a skills-building workshop for the organization’s older youth, focused on interests-based, problem-solving negotiation.
As part of the Harvard Negotiation & Mediation Clinical Program (HNMCP), our three person team traveled to Jerusalem in January 2012 to teach negotiation and mediation skills to a group of Israeli and Palestinian teenagers, all former campers at Seeds of Peace. For three days, the “Seeds” did a range of activities, including several role-plays and active listening exercises. On the final day of the program, the students put their new skills to use in a group negotiation simulation about the conflict in Northern Ireland.
“It was incredible to look around the room and see both Palestinian and Israelis working together during the Ireland simulation,” said Rachel. “It was a challenging negotiation, yet they were communicating effectively, asking questions, listening to each other, and asserting their own interests while working towards a common goal. It was a wonderful sight!”
Often it is the relatively small details of an agreement that can cause the most consternation in negotiation. When viewed in light of the big picture, these details can be of minor importance, but while in the heat of the action they can become points of contention capable of derailing the process altogether, especially if these points are left unresolved and the two parties have to come back to the negotiating table again in the future. Tufts University Fletcher School of Diplomacy professor and Program on Negotiation faculty member Jeswald Salacuse recently described four such scenarios in his article “The Endgame” for the Winter 2012 edition of Tufts Magazine.
Professor Salacuse emphasizes that having good negotiation skills while in the midst of battle is important, but of equal importance is the ability to execute a good endgame. Professor Salacuse offers four methods to close the deal:
Set a deadline.
Not all issues have to be decided immediately.
Invite an influential third-party.
Solicit the opinions of an expert.
Tensions between the Humane Society of the United States and United Egg Producers have existed for more than a decade. When the two sides are asked why they don’t come together to negotiate their differences, each answers that the other is someone with whom negotiation is difficult if not impossible. Often it is those parties with whom we dread having a negotiation to reconcile differences are the ones we need to focus on the most in order to achieve our goals. How do you negotiate with someone whose interests seem so contrary to your own? Sometimes, even in the most difficult negotiations, a win-win outcome is possible. How can forming a novel alliance help your organization in its next negotiation with an intolerable counterpart?
When negotiators can’t manage to resolve a final sticking point, time can be one of the best tools at your disposal. How can you use time to move forward?
First, and perhaps most obviously, take a break from talks. That might mean adjourning until the next day, next week, or even longer. In negotiation, a pause gives everyone a chance to cool off and take stock of the situation. During the break, you might plot strategy with your team or talk to a trusted adviser. You might also take the time to list the goals you’ve achieved in the negotiation thus far, suggests John H. Wade in The Negotiator’s Fieldbook (American Bar Association, 2006). If the list is impressive, your remaining goal may seem less significant – and easier to tackle. If the list is disappointing, you might consider whether this is the right deal for you after all. Maybe your last-minute difficulties indicate a larger problem.
Negotiation is not only something we do at work; often the toughest negotiations we encounter are in our personal lives. In a recent Wall Street Journal article, Daniel Shapiro, Associate Director of the Harvard Negotiation Project and a faculty affiliate with the Program on Negotiation, offers some suggestions on how negotiation skills can be used to repair friendships that are strained or broken. To start, suggests Shapiro, don’t assume that the other party is going to be ready right away to return to a close relationship. By listening closely to the concerns and feelings expressed by a friend, and understanding their perspective, one can begin to rebuild trust, a key component in any relationship.
What do people value when they negotiate? Research by professors Jared R. Curhan and Heng Xu of MIT’s Sloan School of Management and Hillary Anger Elfenbein of Berkeley’s Haas School of Business provides useful insights concerning this basic question.
Using survey data collected from everyday negotiators and filtering it through a sorting procedure conducted by negotiation professionals, the researchers developed a “Subjective Value Inventory” (SVI) which includes four factors: 1) “Feelings about Instrumental Outcomes” represents elements such as “winning” the negotiation, or more generally, gaining a large share of the pie; 2) “Feelings About the Self” includes elements such as saving face and “doing the right thing”; 3) “Feelings About the Negotiation Process” includes elements such as being listened to by the other party; and 4) “Feelings About the Relationship” includes elements such as establishing trust and building a strong relationship.
Why do some people get under our skin? Something they do or say pushes our hot buttons. Annoyance doesn’t foster productive negotiation, of course, but it’s not our fault that they’re getting on our nerves. Or is it?
Psychologists caution that when we have strong visceral reactions to other people, we should examine our own feelings and attitudes, not just theirs. If we’re honest with ourselves, we may recognize in other people’s behavior the dark side of our own nature. Barbara Gray, professor of management and organization at Pennsylvania State University, calls this internal demon our nemesis. It’s always lurking inside us, ready to pounce.
How is it that mediators—who themselves lack any power to impose a solution—nevertheless often lead bitter disputants to agreement? Substantive expertise helps, as does keen analytic skill. But according to a survey by Northwestern University law professor Stephen Goldberg, veteran mediators believe that establishing rapport is more important than employing specific techniques and tactics. To gain parties’ trust and confidence, rapport must be genuine: “You can’t fake it,” one respondent said. Before people are willing to settle, they must feel that their interests are truly understood. Only then can a mediator reframe problems and float creative solutions.
Ron McAfee, a carpenter and roofing expert, spent considerable time working with a condominium association on the design of a new roof deck. After gaining agreement on the proposed layout, design, and materials, McAfee submitted a written bid of $12,500. One of the board members subsequently showed McAfee’s plans to another roofer, who offered to do the job for $10,250. The condo association voted unanimously to go with the cheaper roofer, and McAfee was left with nothing to show for his time and effort.
Remember that big sales contract you negotiated last fall, the one that got you a fat year-end bonus? Well, your manufacturing department has just told you that delivery will be two months late. So now it’s your job to persuade your customer to accept a new date without canceling the deal. And that’s not all. That long-term supply contract you worked so hard on a year ago? The supplier is asking for a meeting to revise the pricing due to its increased energy costs.
How often have you heard a friend or colleague refer to a contract as being “in the bag,” only to find out later that the deal didn’t go through? There always turns out to be a good reason a negotiation fell apart. Yet the fact remains that most negotiators are overconfident about their chances of reaching agreement. A common cognitive bias, overconfidence causes us to have unrealistically high expectations of success, in negotiation and in many other aspects of life.
Imagine that you and a colleague get into an argument about the layout of a final report in front of a coworker you both like. Now suppose the same argument occurs in front of someone your colleague likes but you do not or vice versa—in front of an ally who is your colleague’s foe. As it turns out, the presence of various team members during a negotiation with another teammate may affect your negotiating ability.
At one time or another, most of us have confronted a fellow negotiator who seemed intent on blocking even our most reasonable requests and actions. This was the situation faced by Alexis, the CIO at a midsize publishing company. Phil, the company’s CEO, hired Alexis to create an online information system tailored to the needs of their largest customers.
For decades, Hormel Foods and its employees enjoyed one of the most cooperative and productive labor-management relationships in the processed foods industry. But beginning in the late 1970s, when Hormel pushed for wage concessions, the company’s relationship with its workforce began to deteriorate, especially at the plant in Austin, Minn., the quiet “company town” where Hormel was founded.
The benefits of hiring an agent are well known. Yet negotiation experts often overlook the ways in which you can use the other side’s agent to your advantage.
Kathy, a serial entrepreneur, was negotiating the acquisition of a boutique software-development firm when a dispute arose regarding the valuation of one of the software firm’s assets. Specifically, the firm owned the rights to a technology patent of uncertain value. The firm’s owner argued that this patent was worth millions. Kathy agreed that the patent had potential, but there was a problem. The technology potentially infringed on existing patents, and the holders of these patents would almost certainly challenge the firm’s patent in court. If the patent could withstand these legal challenges, it would indeed be worth millions. If not, it might be worthless.
As negotiation experts, David Lax and Professor James Sebenius find that many negotiators focus on process and substance. Whether in person, over the phone, or through email, business outcomes seem determined by how well parties can establish trust, communicate, and put the best deal on the table. These are the first two and best known dimensions to financial negotiations.
You may be negotiating for others, but that doesn’t mean they should be looking over your shoulder. Negotiators often have trouble bargaining effectively in the presence of onlookers, according to researchers Karen Jehn and Lindred Greer of Leiden University in the Netherlands.