International Business Negotiation McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

Managing Negotiation Mismatches CHAPTER TWELVE Managing Negotiation Mismatches

Managing Difficult Negotiations Negotiators always run the risk of encountering other parties, who for any number of reasons, are difficult negotiators. The difficulty may be intentional: the result of a clear strategic, behavioral, or philosophical choice by the other party The difficulty may be due to inadequate skill: the other party doesn’t see any value or potential for a collaborative approach or doesn’t know how to craft and pursue such an approach 18-3

Managing the Shadow Negotiation and Social Contract Shadow negotiation occurs in parallel with the substantive negotiation and is concerned with how the negotiation will proceed What ground the negotiation is going to cover How the negotiators are going to work together The result of the shadow negotiation is a social contract regarding How the negotiation will proceed Who has influence and power What the boundaries of the negotiation are 18-4

Strategic Levers to Help Navigate the Shadow Negotiation Power moves: designed to bring bargainers back to the table Three kinds of power moves Incentives – draw the attention to the importance of the negotiation Pressure tactics – lead the other party to realize that the status quo is unacceptable Enlistment of allies – help the other party see the advantage of negotiating 18-5

Strategic Levers to Help Navigate the Shadow Negotiation Process moves: designed to alter the negotiation process itself through adjustments to the agenda, sequencing, decision rules, and the like Appreciative moves: designed to break cycles of contentiousness that may have led to deteriorating communication, acrimony, or even silence 18-6

Responding to the Other Side’s Hard Distributive Tactics Call them on it Ignore them Respond in kind Offer to change to more productive methods 18-7

Responding When the Other Side Has More Power Power imbalances in negotiation represent clear dangers to the satisfaction of the needs of both parties and to the collaborative process High-power parties tend to pay little heed to the needs of low-power parties Low-power parties are not usually in a position to trigger and advance in integrative process 18-8

Responding When the Other Side Has More Power Negotiators can: Protect themselves Keep in mind their real interests Negotiation may be the preferred approach to achieve those interests Excessive accommodation to the high-power party will not serve them well over the long term Cultivate their best alternative (BATNA) Lack of a BATNA gives negotiators less power and limits what they can achieve 18-9

Responding When the Other Side Has More Power Formulate a “trip wire alert system” An early warning signal when bargaining gets close to the walkaway point or the BATNA Correct the power imbalance Three approaches Low-power parties taking power High-power parties giving power Third parties managing the transfer and balance of power 18-10

The Special Problem of Handling Ultimatums Ultimatums attempt “to induce compliance or force concessions” They typically have three components: A demand An attempt to create a sense of urgency, such that compliance is required A threat of punishment if compliance does not occur 18-11

The Special Problem of Handling Ultimatums A type of ultimatum is the “exploding offer” Components of an exploding offer include: Specific time limit or deadline attached to it Clear asymmetry of power between the parties Pressure-inducing test of faith for the receiver Restricted set of options Lack of consideration and respect for the offerer by the respondent Apparent lack of good faith on the offerer’s part It can be defused by “embracing it” 18-12

Responding When the Other Side Is Being Difficult When the other side presents a pattern of clear difficult behavior, two possibilities exist: The negotiator does not know any other way to negotiate, but might be responsive to suggestions for changing his or her behavior The other party has a difficulty personality and his or her behavior is consistent within and outside the negotiation context 18-13

Responding When the Other Side Is Being Difficult Ury’s breakthrough approach Step 1: Don’t react—go to the balcony Step 2: Disarm them—step to their side Step 3: Change the game—don’t reject, reframe Step 4: Make it easy to say yes—build them a golden bridge Step 5: Make it hard to say no—bring them to their senses, not their knees 18-14

Responding When the Other Side Is Being Difficult Step 1: Don’t react—go to the balcony Psychologically remove self from the interaction. Step 2: Disarm them—step to their side Act counterintuitively—deflect or sidestep the other party’s negativeness Disarm them using positive, constructive communication Step 3: Change the game—don’t reject, reframe Change the negotiation by proactively reframing their tactics 18-15

Responding When the Other Side Is Being Difficult Step 4: Make it easy to say “yes”—build them a golden bridge Entice the other party to cross over to agreement by Involving him or her in the design of an agreement Satisfying his or her unmet needs Recognizing and being empathetic to their demands and expectations Helping him or her to save face with constituencies Walking them through complex agreements step by step and not demanding closure until everyone is ready 18-16

Responding When the Other Side Is Being Difficult Step 5: Make it hard to say no—bring them to their senses, not their knees Strengthen one’s BATNA Help the other party think about the consequences of not reaching agreement If necessary, use one’s own BATNA Keep sharpening the other’s choice—refer to the attractive terms and focus on the advantages of completing the deal Fashion a lasting agreement 18-17

Points to Remember when Responding to Difficult People Everyone can exhibit difficult behaviors or be difficult to deal with at times; some people are invariably difficult What is difficult behavior to one person may not be difficult for another Difficult people behave the way they do because it achieves results for them Difficult people may continue their behavior because they honestly are not aware of the long-term costs to people and organizations that must contend with them 18-18

Having Conversations with Difficult People Preparation Understand one’s own comfort level and know how one reacts to different difficult conversations Managing the conversation involves three elements Clarity: use language that is as precise as possible Tone: strike a neutral tone when have a stressful conversation Temperate phrasing: choose language carefully to deliver a message that will not provoke the other side 18-19

Having Conversations with Difficult People Three steps people can take once they have an awareness of their likely response to an upcoming difficult conversation: Visualize in your mind how the conversation will go Practice the upcoming difficult conversation with a neutral party Construct a team that has broad experience in dealing with difficult others 18-20