Tuesday, February 13, 2018

Negotiating Without Trust
Or The Convenient Contingency Clause

A few years ago, while working with the European Union (EU), I was having lunch with several European lawyers in Copenhagen. “Why”, one of them asked me in a thick German accent, “when negotiating deals with Americans, they always come with an army of lawyers and reams of contracts?” (In their countries, lawyers play a very minor role and deals are often still consummated on a handshake).

Thinking quickly on my feet, I responded: “In America, people do business on the basis of not trusting one another, hence armies of lawyers and reams of contracts. When Europeans do business, it is on the basis that you do trust one another and therefore less need for the lawyers and extensive contracts”.

This highlights the cultural differences of whether or not to negotiate with someone we don’t trust. In Europe and Japan for example, establishing trust before negotiating is considered a prudent practice in business. The United States however, with more of a “throw caution to the wind” attitude, and a greater risk tolerance, is less concerned about trust, as long as they do the utmost in mitigating risk with very tight contract language and a strong legal system to enforce any breach.

What happens in a culture that typically builds their negotiations on trust such as the Europeans, and finds they need to negotiate with a partner whom they do not trust?

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Wednesday, January 10, 2018

TO TALK OR NOT TO TALK - THAT IS THE QUESTION On the Value of Dialogue and Talk for Its Own Sake

A recent article in the Wall Street Journal (December 27th 2017) presented an interesting international debate between Germany (together with some other NATO allies) and the U.S. as to whether to engage in dialogue with Russia about NATO-Russia issues. The debate pivots on whether talk with Russia will help or hinder the future defense and interests of the NATO alliance, given what many see as Russia’s aggressive stance towards Ukraine.

The article states that U.S. Secretary of State Rex Tillerson said at a meeting of NATO foreign ministers recently that Washington didn’t want regular meetings with Russia “just to talk”. Instead, he said, that the U.S supports “a dialogue with results expected” (emphasis by this author).

Germany, on the other hand, says it remains open to dialogue and in fact recent meetings have allowed the two sides to openly exchange views on difficult and controversial issues.

This difference between the U.S. position and that of Germany, reflect two divergent views on the value of dialogue and talk for its own sake, even when tangible results may not necessarily be the outcome, or even the intent.

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Wednesday, December 6, 2017

'Tis the Season...to practice, refine and hone our negotiation skills

With the Holidays fast approaching, festive dinners and family reunions are very much on our minds. The merry partying however is often accompanied by a degree of pressure, due in part, to the potentially volatile human dynamics and family interactions. With the very different personalities and vastly different opinions and beliefs, we wonder with dread, whether Uncle Jack will opine about his strong political views or if Aunt Mavis might start to pontificate about her religious dogma. These sorts of differences and dynamics mean that family gatherings can quickly become the perfect storm for clashes, conflicts and flare-ups.

However, with the danger also comes great opportunity! An opportunity, to practice and refine our skills so as to manage these potentially volatile conversations and emotionally charged situations effectively, constructively, with grace and with poise, rather than to flee from them.

Below are some strategies to help guide you.

Wednesday, November 8, 2017

BREXIT: Navigating Highly Complex Negotiations

Our work as negotiation consultants involves not only the negotiation process itself, but we are often required to design an overall negotiation structure with which to facilitate productive negotiations. This is particularly true of highly complex negotiations where multiple interest groups must be engaged, and many complex issues need to be resolved. Examples might be land usage and environmental negotiations, policy and regulation negotiations, and peace negotiations in conflict-infested regions.

In these kinds of negotiations, success is largely contingent upon how the negotiating structure is setup: who will be represented and who will represent; how will discussions and dialogue be managed; how will information be shared; what should the sequence of the issues be; how will decisions be made and ratified, and so on.

The design of the negotiation structure is, in itself, a complex negotiation which needs to precede the later substantive negotiations so as to increase the chance of overall success.

Perhaps the paradigm of extremely complex negotiations today is the Brexit negotiations – the “divorce” and untangling between England and the European Union. There are many stakeholders both in Europe and the United Kingdom, with a plethora of very complicated issues that need to be resolved in a way that all parties can live with. Issues include the looming questions of: trade; migration; Britain meeting her financial commitments to the EU budget; rights of citizens and workers; the border within Ireland (between the Republic of Ireland which will remain in the EU and Northern Ireland which will leave the bloc as part of the UK). These together with many other thorny issues will need to be negotiated.

Wednesday, October 11, 2017

NAFTA Negotiations: Framing the Problem Constructively

Consider a negotiation where a land developer is negotiating with a building contractor to build a development of townhouses to rent or sell. Negotiations are going well until the developer demands a clause for an enormous liquidated damages penalty if the project is not completed on schedule. The contractor now feels exploited and pushed towards what he perceives to be an unfair and unbalanced contract. The developer is adamant that because of previous experiences with contractors and losses he has suffered due to delays, he will not agree to a contract without a heavy liquidated damages clause.

The contractor will likely see his current problem in the negotiation to be how to eliminate the liquidated damages clause, while the developer sees his problem as how to convince the contractor to accept an unreasonable liquidated damages clause.

Typically, as in this example, there is no joint, intersecting definition of the problem to be solved, but rather parallel and polarized definitions as each sees his problem from his particular perspective. Furthermore, both contractor and developer in this case, have framed their respective problems in very narrow, limited and zero-sum-like contexts which often leads to sub-optimal outcomes at best and impasse at worst.

How we frame and define the negotiation problem that needs to be solved if parties are going to agree, can frequently make the difference between agreement and impasse.

NAFTA - A Live Case Study
This week, the NAFTA (North American Free Trade Agreement) renegotiation is entering its fourth round of talks in Washington D.C.