NEGOTIATING WITH PURPOSE

On occasion, as part of a client engagement, we might do an "audit" where we will observe our clients as they conduct a live negotiation. During these sessions, we are always struck by the same thing. This "thing" grates on our ears like a beautiful piece of opera sung atrociously off key. It assaults our senses mercilessly. It turns an elegant waltz into a grotesque and awkward stomp. What is this "thing" you ask? It is excessive, relentless, redundant, purposeless and aimless talking.

Often, negotiators perceive the negotiation process as being to persistently assert their demands, declare their positions and impose their proposals without any consideration of the other side's concerns or needs. They think that the more insistent they become the better negotiators they are. They believe that the only way to "win" is to continuously and repetitively state their positions without allowing their opponent to get a word in edge-wise. Oddly, they don't seem to realize that they are engaged in a terribly inefficient and unproductive process at best and a downright destructive one at worst.

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THE (real) ART OF THE DEAL Negotiating Agreements for the Long Term

Patrick Nelson had just started a new business and needed an investor. His father-in-law agreed to invest $500,000 in exchange for a 10 percent share in the venture. He also demanded that Patrick appoints his son, Kevin, (Patrick's brother-in-law) to the position of vice president and that he makes him a minority shareholder. Patrick optimistically accepted these terms.

A few months later, Kevin relocated to another state to be closer to a new potentially large client. Communication between Patrick and Kevin became less frequent, and within a year their relationship started to deteriorate. They were in disagreement about the decision-making processes and about each one's authority within the company. To make matters worse, Patrick's wife (Kevin's sister) had filed for a divorce. Patrick eventually saw no option but to fire Kevin. This resulted in Kevin and his father suing Patrick for a cash settlement equal to their equity shares in the business and for wrongful termination. What started out as an ideal arrangement ended as a nightmare!

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GOOD PERSONAL RELATIONSHIPS - A HELP OR HINDRANCE IN NEGOTIATIONS

In a recent article in Foreign Policy Magazine titled: "How Trump can play nice with Russia without selling out America" (January 6th 2017), Michael McFaul, the U.S. Ambassador to the Russian Federation (2012-2014) expresses concern over President-elect Trump's desire to foster better relations with Putin. He writes "Better relations should never be the goal of U.S. foreign policy toward Russia or any country in the world. Diplomacy is not a popularity contest".

McFaul's perspective appears to be that better relations could negatively impact negotiations and the protecting of our interests. He seems to think that with better relationships, we are more likely to make deeper concessions in order to maintain the relationship. His perspective makes sense if we see negotiation as an adversarial face-to-face confrontation, haggling over who will extract greater concessions from the other.

And therein lies the problem!

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CROSS-CULTURAL NEGOTIATIONS

A very common challenge that we face is how to avoid projecting our own values, fears and concerns onto others, such as our clients or negotiating counterparts. A lawyer for example might go to battle on behalf of a client for the maximum restitution that he perceives possible when the client really wants to settle amicably and move on. A doctor might prescribe an entire arsenal of pain medication when the patient might prefer to live with some moderate pain rather than to intoxicate himself with all those chemicals. A financial advi­sor with a high risk tolerance may talk his client into a high risk/high return investment when his client is far more risk averse.

This becomes a problem when we negotiate across borders and attempt to impose our own values, beliefs and systems onto the other side. What then might be a more effective way to successfully negotiate with those from different cultures to our own?

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FROM BLAME TO PRODUCTIVE DIALOGUE AND RESOLUTION

A major contract was awarded to two large defense contractors who were to work jointly on the project. Each contractor was to design and build different components of the specified system. These components ultimately had to achieve perfect compatibility and work as an orchestrated whole. This required intensive collaboration and communication between the two contractors to ensure an operational and functional system.

Identifying the Challenge

The project appeared to be going well until the final stages when testing began. It soon became dismally clear that there was a flaw in the compatibility design that would require significant redesign and engineering. This would set the project back months if not years and at significant cost. A bitter dispute broke out between the two corporations as to who was at fault. Each asserted blame on the other with equally believable arguments while at the same time neither would accept responsibility.

It was decided that rather than to go to arbitration, the parties would first attempt to negotiate a resolution to the problem. After a frustrating day of negotiations during which the parties were engaged in a barrage of blame and counter-blame, we were retained to mediate the dispute.

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