7 Common Pitfalls to Avoid When Negotiating

I found an interesting article from the Stanford Graduate School of Business Knowledgebase.

The article is based on research by Margaret A. Neal, the Stanford University John G. McCoy-Banc One Corporation Professor of Organizations and Dispute Resolution and Graduate School of Business Trust Faculty Fellow for 2009-2010.

The research described on the blog suggests that successful bargaining means putting a positive spin in every possible circumstance. “If I can trade off issues that I care about more and you care about less, then we've been able to create value in a transaction," according to Neale, "That's the silver lining." She points out common pitfalls or traps that negotiators fall into and leave money on the table. Below is my brief summary of those pitfalls.

1. Poor Planning. Planning is the sine qua non of effective negotiations. Successful negotiators make plans. They know their priorities and their alternatives. They have thought about and discussed thoroughly their Best Alternative to a Negotiated Agreement (BATNA) with their client. They know their bottom lines and deal killers. And they spend the time with their client to make sure that the clients understand and agree with the BATNA.

Good negotiators also try to understand the other parties’ preferences and BATNAs. While at the bargaining table they test to determine if their hypotheses regarding the other parties’ preferences are correct. Good negotiators often prepare a written list or set of goals for themselves.

2. Thinking the pie is fixed. Usually it is not. It is a common mistake when both parties want the same thing to assume that the other side is negotiating from a fixed “win-lose” situation.

3. Failing to pay attention to your opponent. Negotiation trainers emphasize that the single most important skill is the ability to listen to and understand what motivates the other party – the other parties’ interests.

Another important skill is called “framing.” If you are able to frame an issue that addresses the other party’s interests (for example, while your offer may be lower than the other party has asked for, you can talk about certainty of payment, or better relationships, or any other advantage that your offer provides). You can then talk about why your offer is different – and better – than the alternatives. You have framed the issue from explaining why your offer is lower in one aspect to why it is better – for the other party.

4. Assuming that cross-cultural negotiations are just like “local” negotiations. People are different. Cultural differences between negotiators or the parties they represent can create potential benefits or big problems if ignored or misunderstood. These differences range from the huge differences between people from other cultures, to the more subtle differences between men and women, or between people in different occupations, for example, attorneys and engineers.

The bottom line is to pay attention. Do your homework (see the first item above) and be sensitive to cultural and social differences between negotiators.

5. Don’t be locked into anchors. An anchor is when a party tries to set parameters to the negotiations; to try to “anchor” the other party. For example when someone walks in and says “This is a $500,000 case and if you aren’t prepared to negotiate based on that, we are out of here” they are trying to anchor the case.

Don’t accept their premise; rather try to clearly set your parameters for the negotiation. If your BATNA is $150,000, it won’t help you to respond by offering $10,000. Rather, a better approach is to ask the other party to explain the basis of their demand and then explain why that is not reasonable from your point of view. You can ask the other party to think about whether they are willing to come back with a more reasonable offer.

The risk is that they will walk, but if you make a first offer of $150,000 (your bottom line BATNA), the other party will think that it is an opening offer and you have room to move. If you open at $10,000 the other party is likely to walk or assume that you are playing a game with them. Better to watch the anchors and where they are set and negotiate about the anchors, if possible.

6. Caving in too quickly. One negotiations guru described this principle this way: “90% of the work in a negotiation is done in the last 10% of the time.” Make people feel as if they have worked for the deal. No matter what the price of a first offer, even if it is fair, offer less – if only to make the other party feel good about the deal.

7. Don’t gloat. So, when you’ve cut the deal and you love it, don’t dance in front of the other party or even in the elevator on the way out. Never tell the other side that you would have settled for less. Keep it professional and congratulate the other parties on the good job they did. Remember, your paths may cross again.

For more from Margaret A. Neale, see Negotiating Rationally by Max H. Bazerman and Margaret A. Neale, Free Press, 1992.

A New TV Series about a Mediator?

When I started with this blog I certainly did not think I would be posting about TV shows. But a blog by Professor Jill Gross of Pace Law School in the ADR Prof Blog has definitely piqued my interest. From the USA Network, she blogged, the cable channel that broadcasts Monk and Burn Notice, coming soon, is a new TV show.

Apparently the USA cable network is getting ready to broadcast a series based on a mediator. Yes, you read that correctly, a mediator. According to the network, Facing Kate focuses on Kate, a divorced lawyer who leaves her job to become a mediator. If the show is realistic, I assume they will show Kate as impecunious and always hustling for paying jobs.

This is the same cable network that has produced two of my kids’ favorite TV shows, Monk –- a series about an OCD detective set in San Francisco and Burn Notice –- a series about a fired spy ("burned" by his employer) trying to regain his position with Miami and its bikini-clad residents very much center stage. In both of these, and I believe other shows on the USA Network, quirky characters and the venue are significant aspects of the formula.

I am willing –- reluctantly –- to admit that I have watched and enjoyed both shows -– Burn Notice a lot and Monk quite often. They have appealed to me because the characters seem more "realistic" while at the same time they are –- as in most of TV-land –- funny, smart and always ready with the right quip. Sort of like in West Wing. Not particularly realistic, but with intelligence and sense of humor, just as you would expect from a mediator. Right.

I worry, however, that the show will take the easy way out. And for good reason.

The press release announcing the show states that the main character, Kate, “… realized that truth and justice are not always being found in the court room. As a mediator, you lose a lot of constraints of the law, you’re a referee in a room with no rules.”

They go on to describe Kate as a unique and inventive lead character. I can only imagine what they will do with this. This does not leave me with good feelings about the likely verisimilitude of the series.

But then I guess that real spies are not thrilled with Burn Notice, the Miami venue and bikinis and San Francisco detectives cannot appreciate the way they are portrayed in Monk.

At least, set in San Francisco, the scenery will be beautiful.

New Appointees to the Federal Service Impasses Panel

I seem to have a proclivity to write about obscure federal government organizations. First the Administrative Conference of the U.S. and now the Federal Service Impasses Panel (FSIP).

The FSIP is the labor-relations panel that resolves collective bargaining impasses between federal agencies and federal sector unions under the Federal Service Labor-Management Relations Statute. FSIP, which is a part of the Federal Labor Relations Agency, is composed of seven people appointed by the President, one of whom is designated as Chair, and all of whom serve on a part-time basis.

If collective bargaining between federal agency management and the appropriate union, followed by mediation assistance, proves unsuccessful, the FSIP has the authority to recommend procedures and to take whatever action it deems necessary to resolve the impasse.

I write about FSIP because President Obama has appointed some very impressive and qualified people -– people with not only federal sector labor relations experience, but with significant and broad-based mediation and neutral dispute resolution experience. I know well and have worked with the Chair and many of the Panel Members as colleagues and mediators. Thus I feel qualified to opine that the President has made some excellent appointments.

Mary Jacksteit, Chair of FSIP, has over 20 years of experience in mediation, facilitation and negotiation working for non-profit organizations, government agencies and community organizations. She has worked as a labor arbitrator in the public and private sectors, serving on panels of the American Arbitration Association, Federal Mediation and Conciliation Service and U.S. Postal Service. For ten years, she worked at Search for Common Ground -- a conflict resolution organization. Since 2007 Mary has been associated with the Public Conversations Project in Watertown, Massachusetts and her private practice focuses on community, public policy, organizational planning, and conflict management.

The other members of the FSIP include:

• Martin H. Malin, a Professor of Law and the Director of the Institute for Law and the Workplace at Chicago-Kent College of Law, Illinois Institute of Technology, where he teaches courses in labor law, collective bargaining, arbitration, public sector labor law, employment law, contracts and jurisprudence.
  
• Barbara B. Franklin, an arbitrator and mediator in Washington, DC, listed on arbitration rosters administered by the Federal Mediation and Conciliation Service, the American Arbitration Association and the Financial Industry Regulatory Authority and a mediator for the U.S. Court of Appeals and District Court for the District of Columbia.
  
• Marvin E. Johnson, a mediator and arbitrator of public and private disputes who is listed on the rosters of JAMS, the International Institute for Conflict Prevention and Resolution, the American Arbitration Association, and Accormend Associates. He is the founder of the Center for Alternative Dispute Resolution.
  
• Thomas Angelo, who began his career as an attorney with the Solicitor’s Office at the U.S. Department of Labor and then joined the National Treasury Employees Union, serving as Associate General Counsel in Washington D.C. and Regional Attorney for the Federal Labor Relations Authority. In 1983 he became a full time arbitrator and is a member of the National Academy of Arbitrators.
  
• Edward F. Hartfield is the Executive Director of the National Center for Dispute Settlement. He has devoted his entire 36-year career to serving as an impartial party as mediator, arbitrator, facilitator, election administrator, trainer, neutral convener, and ombudsman, also having served as a mediator for the Federal Mediation and Conciliation Service.
  
• Don Wasserman has been a labor relations professional his entire career. Since 2001, he has been an arbitrator/mediator specializing at all levels of the public sector. He is a Member of the D.C. Public Employee Relations Board and the Metropolitan Washington Airports Authority Employee Relations Council.

I believe these appointments will result in two significant changes at the FSIP. First, the Panel Members will be seen, and function, as neutrals and not favor one side – a change, at least in the perception of many, from past years. Second, since most of these appointees are seasoned mediators, the Panel is likely to place a greater emphasis on mediation and take appropriate steps to encourage the parties to resolve their own disputes, even if with the assistance of a mediator.

Congratulations to Mary, Marvin, Ed, Don and the other members of the Federal Service Impasses Panel. I know that they will all mediate well and fairly.