Negotiate 1-2-3

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OPENINGS

Negotiating How to Negotiate

Learning Objectives Est. time: 20 min.

  • Understanding how initial behavior often sets the tone for negotiation
  • Dealing with people with different bargaining styles
  • Encouraging constructive responses

Introduction

When people sit down to negotiate, they not only address substantive issues (financial and contract terms). They also establish their working relationship. It’s a process that emerges from each person says and does and how the other one responds. This back-and-forth is often implicit, but it can profoundly impact on the outcome.

You can think of it as “negotiating how to negotiate.” It unfolds on three levels.

In this module you will sharpen your observational skills by comparing short videos of opening moments of two unscripted negotiations. The pairs of real estate lawyers are dealing with the same substantive issues, but their approaches—and hence their relationships—are strikingly different.

Case Background

Some time ago, colleagues and I videotaped real estate professionals negotiating a scenario involving a proposed shopping center. Participants played the role of either the local developer or a national retailer who might anchor the new mall. We stipulated that most provisions in the agreement had been worked out, but the parties were still deadlocked over provisions governing the parties’ respective rights and responsibilities regarding the space for a decade or more. We’re focused here on the negotiation process—not the fine points of real estate law—but it’s important to note that in such situations, anchor tenants are in the stronger position.

We wanted our volunteers to be themselves, so our instructions were simple: Figure out what you want to get, we told them, and figure out how to get it. As you’ll see, much more is going on than simply hammering out the legal language in the lease.

Pair A

The videos are grainy, but the behavior of each party is sharply defined. Sometimes one person will interrupt the other. Other times a speaker will begin with one thought, and then jump to another without completing his sentence smoothly. That’s the way that people talk in the real world. The clip with the first pair of negotiators runs for about two minutes. The developer is sitting on the left and his prospective tenant is on the right.

Now let's get your thoughts on this negotiation scenario:

Keeping your answers to the above activity in mind, let's explore this negotiation in greater depth:

Pair A: Analysis

Most people who see this clip feel this negotiation has gotten off to a bad start. These negotiators are supposedly laying the foundation for a business relationship that could run for more than a decade. Yet, in a mere two minutes, the developer states that he’s ready to have someone else anchor his mall, and the tenant answers that that’s okay with him.

From start to finish, there’s a rat-a-tat-tat of aggressive questions and snide comebacks. Viewers do not always agree, however, on where things went wrong and who's to blame.

Often a viewer will say it’s when Developer-A talks about finding another tenant. But then someone else usually points out how that comment is a defensive response to the Tenant-B flatly saying that he’s “well aware” that the developer needs him. As one person put it, “The poor developer extends an olive branch, but the tenant whacks him with it.”

Others go back even earlier, noting that the parties rush through any pleasantries and jump right into talking about the project. A few are turned off by what they hear as a presumptuous tone when the developer claims it’s necessary to get through “these clauses as quickly as we can,” since they have only forty-five minutes in which to negotiate. These points are all valid. And they’re easy to make if we have the luxury of reflection, after stopping the video. If we were in a similar situation ourselves, we’d hope to be more adroit.

The problem here is more than the sum of the flippant remarks, however. At the heart of it, neither party seems mindful of where the conversation should go. They get caught up in verbal skirmishing, each one intent on topping whatever the other one just said. And remember, we didn’t tell anyone to be antagonistic. These negotiators stumbled into that behavior.

In this brief opening segment, the parties have resolved the Who question: namely, they will be foes, and the relationship won’t be easy. While they’re still jostling over power—who’s up and who’s down—the prospective tenant seems to be winning the battle. As to framing (What this negotiation entails), for them it’s about whose contract language will prevail. And for setting norms for their interaction (the How), both parties are playing contradict-and-challenge, though neither one may have consciously decided to do so.

Pair B

Now let's watch a second pair of negotiators tackling the same substantive issues, though in a very different way. For them, confrontation was not inevitable. Here it happens that the developer is sitting on the right and his prospective tenant is on the left. Again, the participants are professionals and the negotiation was totally unscripted. The clip runs for about two minutes.

Now let's get your thoughts on this negotiation scenario:

Keeping your answers to the above activity in mind, let's explore the "Pair B" negotiation in greater depth:

Pair B: Analysis

Most viewers agree that these two negotiators are off to a better start than the first two. Some criticize one or two things the negotiators do, but acknowledge that underneath the seemingly casual banter, they quickly get down to business.

Note how these two negotiators call each other Tom and Mike. They also favor the plural we to the singular I or you. By contrast, Developer-A and Tenant-A mention each other’s names only once, and their use of the singular pronoun widens the gap between them.

Zeroing in on grammar may seem like nitpicking, but the language that we use influences how other people see us. It would be silly to claim that we can win friends and influence strangers just by dropping their names into every other sentence, Dale Carnegie to the contrary. But those particular pronouns signal how people regard a relationship. I and you say one thing, while we and us say quite another.

Perhaps this second pair spoke like this deliberately. But it’s just as likely that their language reflects how they view the negotiation process. If you were listening closely, you might recall how, at the beginning, Developer-B paused after referring to “the business at hand that was dumped on both of us in the past two weeks.”

On the surface, that may seem like a casual remark, but the statement also presumes that he and his counterpart have much in common and are engaged in the same task. Then, having lobbed the ball into the tenant’s court, he stops for a beat and waits to hear the response.

After a brief pause, Tenant-B follows the “Yes, and” principle of improv comedy and builds on his counterpart’s comment by saying: “Well, it looks like we’re fairly far along with this lease. At least that’s what I was informed, but they leave the tough part for us, Tom.”

Hearing that confirmation, Developer-B grins and adds a “Yes, and,” himself, by saying, “That is either a sign of how well we are doing or how poorly we are doing within our respective organizations.” His wisecrack prompts a knowing laugh from the would-be tenant.

In just seconds, they have agreed that they are together in the same boat. They are engaging with one another constructively. Either they’ll play the heroes here, rescuing the deal from disaster, or they’ll both be the garbage men who clean up the mess left by the earlier negotiators.

The two pairs also framed their task (the What of negotiation) differently. The first two negotiators acted as if was their job was to pound stakes in the ground and defend their positions. (Indeed, Tenant-A uses that exact word—positions.) They never inquire about underlying interests or disclose their own priorities, for that matter. They soon get into their own kind of sync by falling into a game of me-against-you. It’s doubtful that either one meant to get into a verbal wrestling match. Each may picture himself as a cooperative negotiator and blame the other person for the friction here. If so, each may be half right, as neither one seemed to be thinking, “Is this conversation going where I want it to?”

As for Pair B, we can’t say that their collaborative behavior was consciously orchestrated. Maybe yes, maybe no. But in the video, both parties are clearly more attentive to how their relationship is taking shape. The talk about the problem being dumped in both of their laps helped establish a bond. It also set up their predecessors as useful foils to play against. In defining the task before them, these negotiators aligned themselves against the problem rather than against each other.

Compare that attitude with the approach Developer-A who bluntly asked his counterpart, “Did you draft this lease?” That question seemed to come out of the blue. Whatever his intention might have been, it had the effect of putting Tenant-A on the spot where he had to defend the draft and his role in it. There the counterpart responded, “I had a hand in it, but our senior corporate counsel did the yeoman’s work.” The two of them then go off on a tangent about which of them have seen even shorter clause.

Remember how the Developer-A got in trouble when he told his counterpart “we need you”? Tenant-A quickly replied, “We’re well aware of that” and then repeated that a bit later.

Contrast that with how Developer-B dealt with the power imbalance. It might seem that he’s taking a similar risk here by describing Tenant-B’s proposed lease is “a picture of your leverage.” Essentially that’s like saying that “only someone in your exalted position would even dare to ask for this.”

But he says it with a smile and only after having helped build a collaborative relationship. In those circumstances, it can be a smart move as it acknowledges what everyone already knows: the bargaining table is tilted advantageously for the tenant. Pretending otherwise could cost the developer credibility. Exaggerating his own power might invite Tenant-B here to set him straight. Instead, admitting that you are in the weaker position may paradoxically convey confidence. Developer-B isn’t making a threat, but his whole demeanor seems to say that, whether they make a deal or not, the sun still will come up tomorrow.

Notwithstanding their light tone, the parties are starting to dig into significant issues. Did you notice how Developer-B once again tries to use humor as a tool to get Tenant-B’s prior proposal off the table, by saying “I love it from your point of view”?

His counterpart goes along with the joke, then pushes the conversation further by noting how the proposed clause is designed to give his company flexibility. He concludes by saying that he needs to know more about the developer’s concerns.

Thanks to him, they are getting into norming (the How), jointly figuring out how to proceed. No one has rattled a saber—or made a concession, for that matter. No one has tried to justify his position. Instead, tenant B continues by inquiring about “what particular problems you foresaw with this clause at this mall. And then maybe we can work through it from here.” They can advance the process because of what they accomplished in defining the relationship and the task.

All of this was transacted in the context of a power imbalance. The prospective tenant could locate its store elsewhere in the region. By contrast, the developer was under pressure to make a deal with a big-name national chain. His financing depended on getting a long-term lease with a creditworthy tenant. That’s why both pairs of negotiators were working from the retailer’s standard contract language.

Going back to Pair A, the first words out of Tenant-A’s mouth are, “Welcome to my office.” Though our participants were in a nondescript studio, he claims the space as his own turf, and Developer-A slips into a subservient role. The host, not terribly gracious, leans way back in his chair and says little. The developer, who seems nervous in most viewers’ eyes, fills the awkward silences by motor-mouthing—which compounds his anxious appearance. Thus, the stage was already set when he says, “We need you.”

By contrast, the second pair doesn’t waste time posturing. Both parties are at ease and engaged. Underneath the joshing, these parties are also negotiating important aspects of the relationship. And unlike the first developer, who is often looking down at his notes, the second negotiators both keep their eyes wide open in order to register their counterparts’ reactions and correct any misimpressions immediately.

Negotiations go better, of course, when parties have compatible styles like Mike and Tom. They both seem to be good listeners and curious about what the other one thinks and needs. They build on which other say. (Recall how each used positive words to encourage the other along.) Even their jokes push the negotiation forward. They are simultaneously engaging each other, framing the issues, and actively orchestrating the process.

By contrast, recall how the first pair gave almost no attention to process. The two simply seem to wing it. The sole exception comes just fifteen seconds after the men sit down. Developer-A thanks Tenant-A for a tour of the latter’s offices and then says, “Listen, I understand you have a meeting in about forty-five minutes, so we should try to get through these clauses as quickly as we can.” Some viewers criticize Developer-A’s statement as pushy. They feel it comes too soon, before there’s been any attempt to build rapport. It’s worth asking, though, what should you do when time is short and there are important issues to resolve. If you’re pressed for time yourself, how should you make that clear at the outset without being provocative?

Just rephrasing the comment might help. Instead of saying “we should,” which may sound presumptuous, Developer-A might have said, “I think we have only forty-five minutes today—is that correct?”

Even if Developer-A is certain on that point, double-checking is courteous. It could also prompt a yes from the Tenant-A (a word hopes his counterpart will get used to saying.) With that settled, Developer-A could have then asked, “Okay, so how can we make best use of the time we’ve got?”

Such a question would have touched each of the engaging, framing, and norming bases. It invites the other person to connect. That’s the engagement part. It implies that they have a common task. That’s the framing part. And for norming, it’s a first step in mutually developing a process for getting that task done.

Summary

William Ury, in his book Getting Past No, emphasizes the importance of “going to the balcony” in negotiating. It’s the mental trick of being in two places at the same time. On the one hand, it involves being fully present, center stage, deeply engaged with the other party. On the other hand, it requires distance, having the ability to take in everything that is transpiring from the point of view of a member of the audience, seated way up in the last row.

Developing that capacity enables you to understand that what you just said ma not necessarily be what your negotiating partner heard (or that what you thought you heard wasn’t what he or she meant). More fundamentally it allows you to continually monitor how well the two of you are engaging, framing, and norming the process as it unfolds.

Engaging: Defining the Relationship

  • Friend or Foe? (Working together or against one another.)
  • Easy or Hard? (Trust versus suspicion.)
  • Up or Down? (The balance of power.)

Framing: Defining the Task

  • A win-lose contest? (A zero-sum mindset.)
  • A collaborative effort? (Creating mutual gain.)
  • Something in between? (Evolving awareness.)

Norming: Defining the Process

  • Haggle game (Volley of offers and counter-offers.)
  • Creative exploration (Joint problem-solving.)
  • Wait-and-see? (Winging it without a strategy.)

Additional Resources

Next Module: Getting in Sync [20 min.]
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