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Win-Win Negotiation: Five Salient Points
by Dr. Farid A. Muna
Every one of us has been negotiating since childhood. We negotiated with our parents, siblings, peers, teachers, spouse, our own children, and with other people when buying or selling ideas, services, or products. Thus negotiation is not a new mindset or a new skill that must be learned. It is, however, a mindset that we have to modify considerably in order to succeed in a leadership role. Why? Simply because we grew up with systems and in contexts that encouraged and rewarded win-lose situations: consider the grading and ranking systems at schools and universities, reflect on most sports, video and board games, think about other competitive events throughout our life and you will notice that most of them generate win-lose outcomes.
Where long-term relationships are required and are vital for success, a win-lose negotiation style is likely to be counter productive. The win-win negotiation style is by far the most advocated and written about. This style is very effective where long-term relationships, mutual trust, and commitments are essential to doing business. It is about solving problems to the mutual benefits of the negotiating parties; it is about creating value, enlarging the pie. All parties feel that their interests were met, and thus satisfied with the outcome.
To adequately cover win-win negotiation requires a whole book devoted to the subject; and there is an abundance of excellent work, see: Ury (1993), Fisher, Ury, and Patton (1991), Raiffa (2000), Lax and Sebenius (2006), and Brett (2007), to mention a few. Therefore, this article will summarize only five of the many salient points covered by negotiation experts.
1. Strategic Planning: planning with both parties in mind
As advocated by many writers, especially by the authors of 3-D Negotiation, the planning and strategic thinking that occur well before the first meeting will have tremendous impact on the outcome of the negotiation. Here, I encourage in-depth planning for both sides of the negotiation: for us and the other side. Questions such as the following are asked, and the best educated estimates should be made on behalf of the other party:
- Is win-win the right strategy for this situation?
- Should we meet with one or more parties; possibly setting up parallel negotiations with more than one party?
- Where is the most desirable and likely venue?
- What are our (and their) short-term and long-term objectives?
- What can be considered common ground or common interests, which can be reverted to if a deadlock is looming?
- What are the sources of our (and their) power?
- What are our (and their) interests /variables? How important is each variable to us (and to them); how can we create added value to both sides; this part requires creative ideas for enlarging the pie and arriving at a win-win outcome?
- What is our (and their) minimum, maximum, and the most likely outcome on each of these variables? What are our and their no-deal or walk-away positions?
- What is our (and their) Best Alternative To a Negotiated Agreement (BATNA), and what is the worst alternative?
- What concessions will be traded and how small or large will each concession be?
- Who should make the first offer, when, and how high or low?
- Who will make up the teams (if any) on each side of the negotiating table; and what is their background and culture? What roles do members of the team have? Who will take notes, and who will summarize and document the final agreement?
- How will the current negotiation end: further meetings, sending a formal proposal, or signing a contract? Who will outline the next steps and responsibilities in the negotiating process?
- How and when would the relationship terminate in the near or distant future?
During the initial meetings it is likely that there will be many “time-outs” by both sides. These breaks, even if brief, are golden opportunities to further plan, re-plan, and adjust the strategy based on the crucial information obtained at the beginning of the meeting. One executive related to me what worked well for him; he would ask the team leader of the other side to go out with him for a walk or for a cup of coffee, and would ask him: “Tell me, what do you really need out of this negotiation?”, or: “Tell me, what do you need to deliver to your management?” Being away from the other members of the teams and in an informal setting, allowed the two lead negotiators to establish closer rapport, come to grips with what is important to each party, and gave room to the negotiators to reciprocate during any future transactions.
2. Trading Concessions
To trade concessions effectively, it is imperative to list all the variables (some call them interests, options, or issues) that can be discussed in a negotiation. It is equally crucial to rank the variables according to their importance and value to both parties. Here are some hypothetical variables (and their rankings) that may dominate a negotiation:
The reader will readily notice that the most important variables to the buyer (price, quality and delivery) are not equally valuable to the seller (quantity, type/duration of contract, and new products/merchandise). Clearly the seller in this hypothetical example is trying to gain a new or bigger account and to establish a long-term relationship. This particular situation should make trading concessions easier and may well lead to the satisfaction of both parties.
The above planning exercise is critical since the most common error by unskilled negotiators is to make the assumption that the issues of importance to themselves must be of equal importance to the other party; while it is probably more accurate to assume that the issues of importance to one party are rarely (if ever) of equal importance to the other. In the above hypothetical case, the seller will be likely to reduce the price(s) and agree on faster deliveries on condition that larger quantities and/or new products are purchased covered by a new contract of a longer duration. The pie becomes enlarged, and both parties feel that they have won.
Another skill that effective negotiators often use is the conditional offer. Generally, concessions must not be granted unless equivalent concessions are received, considering their differing value to each party. The conditional offer sounds like this: If ..., then ... . Here are some simple examples:
If you reduce the price by x, I will then increase the quantity to y.
Or: If you deliver by x, then I will pay the invoice in y days.
3. Communicating Effectively
Communication is central to the negotiation process; negotiation is almost impossible without written, verbal and non-verbal communication of ideas, interests, offers and counter-offers. Furthermore, it is through communicating with the persons on the other side of the negotiation that one can start to understand, and eventually identify, their personality types.
The keys to effective communication are active listening, asking probing questions, asking open-ended questions, paraphrasing, summarizing, and using silence when appropriate. Of course, these communication skills, when used well, are not only essential to making good deals but are also important to our everyday life whether at home, in the office, or in the community. The value of effective communication increases significantly when working or negotiating in a multicultural environment.
When the other side adopts an aggressive hardball behavior, you can use the technique that the Harvard Negotiation Project called Jujitsu (Ury, Fisher, and Patton, 1991). Named after the Japanese martial arts in which an opponent’s strength is used to one’s advantage; negotiation jujitsu counters the moves of aggressiveness in ways that direct the other side’s attention to the merits of the issues at hand. In brief, when your ideas are attacked, respond by asking for the reasons behind that attack. When they attack your offers, take it as constructive criticism and invite further feedback and advice. Avoid generating resistance by asking rather than stating. Ask questions that will help educate and challenge the other side. Personal attacks should be recast as attacks on the problem. Generally, Jujitsu urges the negotiator to use questions and strategic silences to draw the other party out.
Communicating effectively means to build trust and rapport; and it also means the ability to iron out differences amicably before they lead to deadlocks or litigation. Here is an interesting anecdote relayed to me by a California real estate developer: upon agreeing on a multi-million dollar deal, the two parties were having lunch the day after the agreement was signed, when the buyer brought up the subject of underground gas lines on the property that needed to come out as required by law. The seller proposed a creative way of resolving this thorny issue, he said, “instead of getting into future litigation and for the sake of our relationship, let us decide who pays for this unforeseen additional cost by flipping a coin!” They agreed. And that flip of the coin determined who will pay for the $25,000 needed to remove the gas lines—which eventually resulted in a win-win negotiation and preserved a good long-term relationship.
4. Understanding the Personality of the Other Negotiator
There is no doubt that knowing the personality and mindset of the person(s) with whom you are negotiating is a great advantage, and may even lead to better win-win outcomes. But how can a negotiator assess the personality of someone who may be a total stranger, or someone whom you cannot subject to a personality test? Well, it is possible to have a very good estimation of the personality type if you are familiar with personality tests. There are several such instruments and methods for understanding personality and preferred modes of behaving; and if familiar with one or two of these instruments, a negotiator will have a good head start. Among the well known personality tests are: Belbin Team Roles profile, Myers-Briggs Type Indicator (MBTI), Thomas-Kilmann Conflict Mode instrument, and DISC.
Let us discuss one such test which we at Meirc use in our negotiation seminars. DISC is based on four dimensions of behavior. The four dimensions are:
Dominance: People who score high on D tend to be decisive, active in dealing with problems and challenges, forceful, demanding, aggressive, and results oriented. They feel comfortable taking the leading role in a negotiation team.
Influence: People with a high I score display an optimistic and outgoing mindset. They tend to be highly social, persuasive, emotional, intuitive, and participate well as team members. They use their social skills to influence and convince others.
Steadiness: Persons with high S styles scores want a steady pace, security, and do not like sudden change. They tend to be calm, relaxed, patient, predictable, deliberate, stable, and consistent. They are team players, but do not like sudden change or conflict.
Conscientiousness: People with high C score focus on details and quality. They are accurate, meticulous, neat, cautious, factual and systematic. They prefer to adhere to rules, regulations, and structure. They are likely to take notes, and to use their calculators while negotiating.
Of course, people who score low on any of these four dimensions will tend to display totally opposite behaviors. Given the above, what type of personality does a negotiator have who dislikes facts and analysis, is impatient to make a deal, and is domineering and aggressive at the outset of a negotiation. It takes only a few minutes into the negotiation to know whether this particular negotiator is a D, I, S or C. For example, if this negotiator is a D type (as it seems) should you as his counterpart try to delve into the nitty-gritty details or be analytical in your presentation? Or should you present the overall situation as a challenging problem and ask for a mutually acceptable solution? Similar questions should be posed when negotiating with other personality types. You should thus adjust your strategy and approach according to the behavior that you observe at the outset of the negotiation process.
When forming a negotiation team, it is best to create a balance by selecting members of various types and styles. For instance, imagine if there are only D types on one or both sides of the negotiation table: one may well end up with arguments and deadlocks or, worse yet, the Ds will reach an agreement with too many loose ends which could cause it to fall apart in the future.
In summary, a wise negotiator who is acquainted with the literature on behavior and personality types should be able to adjust his or her approach accordingly to fit the situation. This will increase the likelihood of reaching a smoother and more successful win-win outcome.
5. Cross-Cultural or Multinational Negotiation
Would you negotiate with a person from your own city or country in the same manner that you would with someone from another country, say, Japan, Egypt, or Brazil? Probably not! Yet, we often observe negotiators who assume that the main difference between them and their foreign counterpart is language. Negotiating with other cultures requires a new set of skills, attitudes, and knowledge—a new mindset. Again many books have been written on how to negotiate globally (for example, Brett, 2007), and thus we will discuss only one unequivocal recommendation on this subject, namely, avoiding stereotyping.
Much of the literature on global negotiation tends to stereotype people of other cultures. Some, for example, state that some cultures have low respect for time. Or that certain cultures prefer to make decisions in groups. Although there is a large element of truth in these generalizations, it would be a serious mistake to apply them to every single individual in that culture. People of different cultures vary along a normal distribution or bell-shaped curve.
The anthropologists Kluckhohn and Murray wrote in 1948 what I consider to be a truism:
Every person is in certain respects:
a. Like all other persons
b. Like some other persons
c. Like no other person.
No one would deny that every person is in certain respects like all persons (note the similarities among humankind—biological and physiological); every person is in certain respects like some other persons (similar groups or professions); and every person is in certain respects like no other person (unique personality and DNA). However, a doctor treating a patient’s broken leg would do it in the same manner regardless of the race, color, sex, or religion of that patient. A sociologist would compare the behavior of groups of people from similar professions or income brackets; while a psychologist would consider each client as a unique person.
Leaders and negotiators working in a multicultural environment will have to take the above truism into serious consideration. Hence a negotiator has to take into account both cultural as well as individual differences in personality of people within that same foreign culture, as we indeed do when we negotiate with a D or I or S or C who belongs to our own culture.
However, I would hasten to add that to be truly effective, global negotiators will have to also use their ears, hearts, and minds to a much larger degree than when negotiating with people of the same group or culture. The ears refer to effective communication, especially to active listening. The hearts refer to cultural empathy and avoidance of stereotyping. And, the minds refer to deeper knowledge of a specific culture and its nuances. For example, negotiating in most Asians countries would require more patience and time than is normally needed in the West. It will also require keen sensitivity to what is being said and what is not being said, creative ways of maintaining respect and face saving, higher degrees of personal relationships, and the use of connections.
Negotiations will be much more effective if one approaches them with a strategic mindset, well before one sits at the negotiation table. Such strategies include setting up the negotiation in the right sequence, with the right parties, under the right expectations, while anticipating deadlocks and the likelihood of walking away if there is no deal. These strategies should also cover the moves required to create value by making the pie bigger, as well as strategies on how to divide the larger pie; while at the same time defending one’s interests, countering dirty tricks and power tactics, and constantly steering the negotiation into a constructive problem-solving mode when facing tough and hardball negotiators.
Brett, J. (2007), Negotiating Globally, , (2nd. edition), Jossey-Bass.
Fisher, R., Ury, W. and Patton, B. (1991), Getting to Yes: Negotiating Agreement Without Giving In, ( 2nd. edition), Penguin Books
Lax, D. and Sebenius, J. (2006), 3-D Negotiation: Powerful Tools to Change the Game in Your Most Important Deals,,Harvard Business School Press.
Raiffa, H. (2000), The Art and Science of Negotiation, Belknap Press.
Ury, W. (1993), Getting Past No: Negotiating with Difficult People (revised ed.), Bantam