Developing negotiation skills

The Sydney Morning Herald

When the caveman wanted a bride, legend says he would probably go into her cave, knock her on the head and drag her out by the hair.

As negotiation techniques go, this was a very poor one. And while we have moved on from the confrontation at the cave mouth, our negotiation techniques still tend to be “pretty primitive”, according to negotiation and mediation specialist Michael Klug.

Klug, dispute resolution partner with law firm Clayton Utz in Brisbane, also teaches negotiation skills to law students and his firm’s own solicitors and clients.

While there is a high level of interest in understanding the negotiation process, Klug says Australians are much too inclined towards “short, sharp” but ineffectual negotiations.

“Someone said to me once that if a matter can’t be settled in an hour, it can’t be settled. In my negotiations, after the first hour they’ve barely finished their cup of coffee.”

But Australians are not alone in this, as the pace of Western society in general means we impose our need for speed on our negotiations.

Klug believes we can learn a great deal from the ancient cultures where relationships build up slowly and trust emerges in a slow but constant way.

“Once the trust is there, it’s relied on absolutely, and people are rarely disappointed by it.”

After more than 20 years in dispute resolution, he has concluded that good negotiation requires time to do high level preparation, for complex negotiations to mature and to slowly build up trust.

The “wham bam thank you ma’am” style of negotiation where an executive says “this is my first, best and last offer” rarely succeeds, because concession is essential to successful negotiation.

“One of the curious features of negotiation is that you’re unlikely to get a deal unless you bring the other side with you. You can’t cut a deal by yourself,” he says.

Klug uses interest-based bargaining, a collaborative and integrative method which is the antithesis of positional bargaining where a party takes a stand and refuses to budge, sometimes because they feel they will lose face.

Positional bargaining may involve tactics which Klug labels as “very foolish”, such as opening with your demands or your price at a “stupidly high level”.

Another common error is failing to properly prepare, being forced to wing the negotiation and then falling into false threat or bluff which is “highly ineffective”.

The format of most negotiations is generic, and it is important to understand the negotiation continuum.

Klug says a great deal of preparation is necessary to work out a credible starting point, and even then you must accept you will probably have to shift from this position.

The most difficult phase is often around mid-point, when the negotiation seems to be in the doldrums.

“You hear key words like ‘this is going nowhere’, ‘these people are mucking us around’, ‘lets get out of here, we’re wasting our time’,” Klug says.

This is a normal stage of the negotiation process, however you should also be aware that the negotiator who is least affected by a deadline has the greatest power in negotiation.

Klug says there are two principal enemies of negotiation: the impasse or log-jam and uncontrolled escalation.

Impasse can be dealt with by skilled negotiators who use breakthrough techniques, but uncontrolled escalation ultimately results in one party saying “stuff you, I’ll see you in court”.

While Klug acknowledges that lawyers have reputations as deal-breakers not deal-makers (he says such reputations are undeserved), those who are dispute resolution-minded would try to negotiate or mediate to solve the problem and reduce their clients’ transaction costs.

But legal fees are not the only expense, as Klug says the greatest cost of unresolved disputation and conflict is the destruction of the commercial relationship between the parties.

Dr Alan Tidwell, a senior lecturer at Macquarie Graduate School of Management and a specialist in negotiation and conflict management, plunges his students into a simulated “intense multi-party negotiations” to help develop their skills.

“It gets pretty real, emotions get frayed, people get tired and all sorts of interesting human dynamics kick in,” he says.

These simulations are valuable for teaching people to deal with the stress and fatigue of negotiations, and the importance of learning to ask for time out.

Tidwell says this is one of the constant failings of negotiators who are tired, cannot think of another alternative but do not dare request a break because of the signal this might send.

But the greatest failing of all is lack of preparation.

If negotiators do not think through what they are really trying to achieve, then they are not open to all possibilities or to all “mutually satisfying” outcomes that may be possible.

Tidwell believes many people have an inability to conceptualise “helping the other side while helping yourself”, and stresses the importance of understanding the needs and interests of both parties.

“You plan for yourself – these are my limits, my objectives, my resistance points – but you fail to do the same kind of textured analysis for the other side.

“So you fail to really appreciate all the pressures that are impinging on the other side, or the requirements the other side may have. So you’ve only done half your homework.”

Sometimes, Tidwell says you can simply go and ask the other party for information that will help you with this analysis.

“You’d be surprised how often the other side will be more than happy to tell you what’s going on.”

Newspapers, your own knowledge of your industry and the competitive forces at work are other sources of information.

It is important to also think hypothetically, setting up questions you would put to the other side and considering other scenarios that might affect the negotiations, such as alternative buyers or supply problems.

Breakout

Almost any negotiation raises issues of ethics. Do you always tell the truth, do you shade the truth or do you lie if it means you will get the outcome you want?

Tidwell points out that most of us are at least used to shading the truth in areas such as real estate negotiations, because we would rarely be honest initially in giving our bottom line to a real estate agent.

But business negotiations where people may be damaged by unethical behaviour are another matter.

Tidwell gives his students a number of ethical dilemmas to work through, forcing them to reflect on their own values and beliefs and where they draw the line on unethical behaviour.

One case study involves the sale of a property in an area of high unemployment. A multi-national corporation plans to buy the property and build a small factory, but you know there is an old toxic waste dump on the site.

Do you tell the multi-national about the dump and possibly lose the deal and the employment opportunities for local people? Or do you say nothing?

Tidwell says some students dismiss this very quickly, and say there is an obligation to report the dump to the authorities. Others rationalise by saying it depends on how bad the dump is, and how easily it would be found.

“There are business rationalisations imposed on this, but at the end of the day I think it’s people’s interpretation of right and wrong, the way they dress that up and rationalise through it.

“That’s what we often find in ethical reasoning. People – most of the time – will rationalise unethical conclusions.”

Klug says negotiators cannot go wrong by doing the right thing, however much pain is involved.

“I would look to see if the problem could be fixed, but I would not under any circumstances be deceptive about the existence of the problem.

“Firstly, it’s actionable by law. Secondly, as a matter of ethics and propriety, you just can’t do it.”