Category: Uncategorized

When confronted with apparent dishonesty, we feel betrayed, angry, anxious and disappointed. We are also confused as to whether we should confront it or ignore it, or how to confront it if we need to. If we ignore it, we are at risk of allowing it to continue, and if we confront it we risk the relationship – hence the conundrum or the “Dishonesty Dilemma”.

A dilemma by definition does not allow for elimination of risks and dangers, and the best we can do is to mitigate the risks while curtailing potential damage and harm.

Although there is not one answer for all situations, in this column we offer guidelines to apply and a thought process to work through to ensure an effective and constructive response.

With our allies today feeling less sure of our support, U.S. foreign policy is faced with a credibility issue among our alliance partners. Other countries may be less inclined to trust our promises, commitments and pledges and therefore less likely to enter into trade agreements, nuclear anti-proliferation deals and defense treaties with us.

I was recently watching a rerun of Firing Line from circa 1970 in which William F. Buckley Jr. was debating (a very young) John Kerry as to whether or not the U.S. should cut their losses and pull out of Vietnam unconditionally.

Buckley argued that if the United States were to proceed along that course of action, it would send a negative message to our SEATO (South East Asian Treaty Organization) partners that we cannot be relied upon and trusted. Kerry argued (not very compellingly in the opinion of this author) that although the negative message issue was a general concern, it did not apply in the case of Vietnam.

In listening to the debate, I found it astonishing that both Buckley and Kerry failed to suggest the obvious solution to this dilemma. Let us consult with our SEATO partners (or at the least inform them), before making the decision. Consultation means that I inform my relationship partners about decisions that may affect them, that I solicit their thoughts and concerns and listen to them.

It is possible that after a good-faith attempt to engage another party in negotiation and problem solving, no progress is made. They may be insistent and demanding or unreasonable and uncompromising. They may just be unwilling to work jointly towards a solution or trying selfishly to impose their demands. In this situation, many of us avoid saying “no” even though we should. We become anxious about how the other may take it, and the defensiveness and anger that it may arouse. We may deal with this by avoiding the issue altogether and leaving the other party confused about where we stand. Or, even worse, we may say “yes” when what we really mean is “no”.

Never concede to anything which is unacceptable just because of a fear of being assertive and saying “no”. John F. Kennedy’s famous statement: “Don’t fear to negotiate but don’t negotiate out of fear” is a good rule to remember in this situation.

Knowing how to say “no” constructively and positively is a skill that we all need in order to manage our relationships with authenticity and effectiveness. In this column, we provide a three-step formula for saying no while taking the negativity out of the “no!” and without even uttering the word.

THE CHALLENGE
A strategic question that is often asked when it comes to negotiation is: should you make the first offer or wait for the other party to put their offer on the table first?

I have heard different opinions from various negotiation theorists. There are those who suggest that it is better to wait for the other party to put forward their offer first. This, they argue, will give you a sense of where the lower end of their zone of possible agreement may lie and from which you can then work upwards if you are selling, (and the reverse if you are buying).

These theorists also suggest that the “appropriate” response to their offer should be an obvious and highly exaggerated flinch, thereby clearly indicating how “crazy” they are for even considering such an “unreasonable” offer. The hope is that the all-powerful flinch will immediately shift them away from their initial position and closer to where you want to them to be.

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.

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!

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!

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?

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.

A large corporate client was trying, unsuccessfully, to negotiate a long term supplier agreement with a small US electronic components manufacturer with a global reach.

Negotiations had been on and off for several months and was at an impasse. They were not making much progress in terms of pricing, type of contract (sole, dual or multi-source) or mutually acceptable warranties, assurances and other terms and conditions.

Our client had very specific needs to meet their newly instituted just-in-time, lean manufacturing processes, and customer made-to-order products. Although there were alternative suppliers to contract with, they felt that they would get better pricing, high service levels, responsiveness, flexibility and attention from the smaller company that was anxious to prove itself.

Our client was surprised at the cavalier attitude and recalcitrant tenor of the smaller company and would have expected them to jump hoops to get this business. They approached us for negotiation advice and strategy, challenging us to put talks back on track, to repair the strained relationships and to salvage deal.