|
|
INTERNATIONAL NEGOTIATIONSДата публикации: 24.02.2017 07:23
UNIT 12
INTERNATIONAL NEGOTIATIONS
PLAN 1. Introduction (definition, etymology, negotiation theory) 2. Types of negotiation 3. Negotiation styles 4. Types of negotiators 5. The essential elements of negotiation (strategies and techniques) 6. Key skills in negotiating 7. Tactics and how to overcome the top ten negotiating tactics 8. International negotiations (general principles and differences) 9. Challenges of negotiating across cultures
LECTURE Let's first define what negotiation means. The Random House Dictionary (2nd Edition) defines "to negotiate" as “...to deal or bargain with another or others, as in the preparation of a treaty or contract or in preliminaries to a business deal.” Webster's Seventh New Collegiate Dictionary has it as “ ...to confer with another so as to arrive at the settlement of some matter. “ But one of the best definition I've come across was given by Robert D. Rutherford, Ph.D., author of The Twenty Five Most Common Mistakes Made in Negotiating...and What You Can Do About Them. He defines negotiation as: “...an effort to resolve a difference between two or more parties by the give-and-take process.” Negotiation is a dialogue between two or more people or parties intended to reach a mutually beneficial outcome, resolve points of difference, to gain advantage for an individual or collective, or to craft outcomes to satisfy various interests. Negotiation occurs in business, non-profit organizations, government branches, legal proceedings, among nations and in personal situations such as marriage, divorce, parenting, and everyday life. The study of the subject is called negotiation theory. The foundations of negotiation theory are decision analysis, behavioral decision analysis, game theory, and negotiation analysis. Another classification of theories distinguishes between structural analysis, strategic analysis, process analysis, integrative analysis and behavioral analysis of negotiations. Negotiation is a specialized and formal version of conflict resolution most frequently employed when important issues must be agreed upon. Negotiation is necessary when one party requires the other party's agreement to achieve its aim. The aim of negotiating is to build a shared environment leading to long-term trust and often involves a third, neutral party to extract the issues from the emotions and keep the individuals concerned focused. It is a powerful method for resolving conflict and requires skill and experience. Zartman defines negotiation as "a process of combining conflicting positions into a common position under a decision rule of unanimity, a phenomenon in which the outcome is determined by the process." Professional negotiators are often specialized, such as union negotiators, leverage buyout negotiators, peace negotiators, hostage negotiators, or may work under other titles, such as diplomats, legislators or brokers. Etymology The word "negotiation" originated in the early 15th century from the Old French and Latin expressions “negociacion” and “negotiationem.” These terms mean “business, trade and traffic.” By the late 1590s negotiation had the definition, "to communicate in search of mutual agreement." With this new introduction and this meaning, it showed a shift in “doing business” to “bargaining about” business. Types of Negotiation. Negotiation can take a wide variety of forms, from a trained negotiator acting on behalf of a particular organization or position in a formal setting, to an informal negotiation between friends. Negotiation can be contrasted with mediation, where a neutral third party listens to each side's arguments and attempts to help craft an agreement between the parties. It can also be compared with arbitration, which resembles a legal proceeding. In arbitration, both sides make an argument as to the merits of their case and the arbitrator decides the outcome. This negotiation is also sometimes called positional or hard-bargaining negotiation. Negotiation theorists generally distinguish between two types of negotiation: distributive and intergrative. Distributive Negotiation Distributive negotiation is also sometimes called positional or hard-bargaining negotiation. It tends to approach negotiation on the model of haggling in a market. In a distributive negotiation, each side often adopts an extreme position, knowing that it will not be accepted, and then employs a combination of guile, bluffing, and brinkmanship in order to cede as little as possible before reaching a deal. Distributive bargainers view negotiation as a process of distributing a fixed amount of value. The term distributive implies that there is a finite amount of the thing being distributed or divided among the people involved. Sometimes this type of negotiation is referred to as the distribution of a "fixed pie." Distributive negotiation is also sometimes called win-lose because of the assumption that one person's gain results in another person's loss. A distributive negotiation often involves people who have never had a previous interactive relationship, nor are they likely to do so again in the near future. Simple everyday examples would be buying a car or a house. Integrative Negotiation Integrative negotiation is also sometimes called interest-based or principled negotiation. It is a set of techniques that attempts to improve the quality and likelihood of negotiated agreement by providing an alternative to traditional distributive negotiation techniques. While distributive negotiation assumes there is a fixed amount of value (a "fixed pie") to be divided between the parties, integrative negotiation often attempts to create value in the course of the negotiation ("expand the pie"). It focuses on the underlying interests of the parties, approaches negotiation as a shared problem rather than a personalized battle. Integrative negotiation often involves a higher degree of trust and the establishing a relationship to achieve mutual gains. It is also sometimes called win-win negotiation. In the book Getting to YES: Negotiating Agreement Without Giving In Roger Fisher and William L. Ury developed the method of principled negotiation and five principles it is based on. Their process of principled negotiation can be used effectively in almost any type of dispute. Their five principles are:
Source: Roger Fisher and William L. Ury, Getting to YES: Negotiating Agreement Without Giving In, Penguin Group (1981) The Essential Elements of Negotiation There are many different ways to categorize the essential elements of negotiation. One view of negotiation involves three basic elements: process, behavior and substance. The process refers to how the parties negotiate: the context of the negotiations, the parties to the negotiations, the tactics used by the parties, and the sequence and stages in which all of these play out. Behavior refers to the relationships among these parties, the communication between them and the styles they adopt. The substance refers to what the parties negotiate over: the agenda, the issues (positions and - more helpfully - interests), the options, and the agreement(s) reached at the end. Another view of negotiation comprises four elements: strategy, process, tools, and tactics. Strategy comprises the top level goals - typically including relationship and the final outcome. Processes and tools include the steps that will be followed and the roles taken in both preparing for and negotiating with the other parties. Tactics include more detailed statements and actions and responses to others' statements and actions. Some add to this persuasion and influence, asserting that these have become integral to modern day negotiation success, and so should not be omitted. Adversary or Partner? The two basically different approaches to negotiating will require different tactics. In the distributive approach each negotiator is battling for the largest possible piece of the pie, so it may be quite appropriate - within certain limits - to regard the other side more as an adversary than a partner and to take a somewhat harder line. This would however be less appropriate if the idea were to hammer out an arrangement that is in the best interest of both sides. A good agreement is not one with maximum gain, but optimum gain. This does not by any means suggest that we should give up our own advantage for nothing. But a cooperative attitude will regularly pay dividends. What is gained is not at the expense of the other, but with him. Negotiation Styles Kenneth W. Thomas and Ralph H. Kilmann identified 5 styles/responses to negotiation. These five strategies have been frequently described in the literature and are based on the dual-concern model. The dual concern model of conflict is based on two themes or dimensions
2. A concern for others (i.e.empathy). Based on this model, individuals balance the concern for personal needs and interests with the needs and interests of others. The following five styles can be used based on individuals’ preferences depending on their pro-self or pro-social goals. Before we proceed to explain about the different negotiation styles it is important to note two things. First, people tend to prefer a style. In fact, with practice people can effectively use all five negotiation styles. Second, there is no universal best negotiation style. The best style to use differs from negotiation to negotiation. These styles are: accommodating, avoiding, collaborating, competing and compromising. 1. Accommodating: Individuals who negotiate with an accommodating style put great value and emphasis on preserving the relationship. Accommodators are sensitive to the emotional states, body language, and verbal signals of the other parties. 2. Avoiding: Individuals who do not like to negotiate and don't do it unless warranted. When negotiating, avoiders tend to defer and dodge the confrontational aspects of negotiating; however, they may be perceived as tactful and diplomatic. 3. Collaborating: Individuals who enjoy negotiations that involve solving tough problems in creative ways. Collaborators are good at using negotiations to understand the concerns and interests of the other parties. 4. Competing: Individuals who enjoy negotiations because they present an opportunity to win something. Competitive negotiators are often strategic. Because their style can dominate the bargaining process, competitive negotiators often neglect the importance of relationships. 5. Compromising: Individuals who are eager to close the deal by doing what is fair and equal for all parties involved in the negotiation. Compromisers can be useful when there is limited time to complete the deal; however, compromisers often unnecessarily rush the negotiation process and make concessions too quickly. Source: Kenneth W. Thomas and Ralph H. Kilmann, Thomas-Kilmann Conflict Mode Instrument (TKI)Types of Negotiators Three basic kinds of negotiators have been identified by researchers involved in The Harvard Negotiation Project. These types of negotiators are: Soft bargainers, hard bargainers, and principled bargainers.
Researchers from The Harvard Negotiation Project recommend that negotiators explore a number of alternatives to the problems they are facing in order to come to the best overall conclusion/solution, but this is often not the case (as when you may be dealing with an individual utilizing soft or hard bargaining tactics) (Forsyth, 2010). Top Ten Effective Negotiation Skills Job descriptions often list negotiation skills as a desirable asset for job candidates, but the ability to negotiate requires a collection of interpersonal and communication skills used together to bring a desired result. The circumstances of negotiation occur when two parties or groups of individuals disagree on the solution for a problem or the goal for a project or contract. A successful negotiation requires the two parties to come together and hammer out an agreement that is acceptable to both. Problem Analysis Effective negotiators must have the skills to analyze a problem to determine the interests of each party in the negotiation. A detailed problem analysis identifies the issue, the interested parties and the outcome goals. For example, in an employer and employee contract negotiation, the problem or area where the parties disagree may be in salary or benefits. Identifying the issues for both sides can help to find a compromise for all parties. Preparation Before entering a bargaining meeting, the skilled negotiator prepares for the meeting. Preparation includes determining goals, areas for trade and alternatives to the stated goals. In addition, negotiators study the history of the relationship between the two parties and past negotiations to find areas of agreement and common goals. Past precedents and outcomes can set the tone for current negotiations. Active Listening Negotiators have the skills to listen actively to the other party during the debate. Active listening involves the ability to read body language as well as verbal communication. It is important to listen to the other party to find areas for compromise during the meeting. Instead of spending the bulk of the time in negotiation explaining the virtues of his viewpoint, the skilled negotiator will spend more time listening to the other party. Emotional Control It is vital that a negotiator have the ability to keep his emotions in check during the negotiation. While a negotiation on contentious issues can be frustrating, allowing emotions to take control during the meeting can lead to unfavourable results. Verbal Communication Negotiators must have the ability to communicate clearly and effectively to the other side during the negotiation. Misunderstandings can occur if the negotiator does not state his case clearly. During a bargaining meeting, an effective negotiator must have the skills to state his desired outcome as well as his reasoning. Collaboration, Teamwork and Team Negotiations Negotiation is not necessarily a one side against another arrangement. Effective negotiators must have the skills to work together as a team and foster a collaborative atmosphere during negotiations. Those involved in a negotiation on both sides of the issue must work together to reach an agreeable solution. Due to globalization and growing business trends, negotiation in the form of teams is becoming widely adopted. Teams can effectively collaborate to break down a complex negotiation. There is more knowledge and wisdom dispersed in a team than in a single mind. Writing, listening, and talking, are specific roles team members must satisfy. Problem Solving Individuals with negotiation skills have the ability to seek a variety of solutions to problems. Instead of focusing on his ultimate goal for the negotiation, the individual with skills can focus on solving the problem, which may be a breakdown in communication, to benefit both sides of the issue. Decision Making Ability Leaders with negotiation skills have the ability to act decisively during a negotiation. It may be necessary during a bargaining arrangement to agree to a compromise quickly to end a stalemate. Interpersonal Skills Effective negotiators have the interpersonal skills to maintain a good working relationship with those involved in the negotiation. Negotiators with patience and the ability to persuade others without using manipulation can maintain a positive atmosphere during a difficult negotiation. Ethics and Reliability Ethical standards and reliability in an effective negotiator promote a trusting environment for negotiations. Both sides in a negotiation must trust that the other party will follow through on promises and agreements. A negotiator must have the skills to execute on his promises after bargaining ends. Tactics Tactics are always an important part of the negotiating process. But tactics don't often jump up and down shouting "Here I am, look at me." If they did, the other side would see right through them and they would not be effective. More often they are subtle, difficult to identify and used for multiple purposes. Tactics are more frequently used in distributive negotiations and when the focus in on taking as much value off the table as possible. Many negotiation tactics exist. Below are a few commonly used tactics. Auction: The bidding process is designed to create competition. When multiple parties want the same thing, pit them against one another. When people know that they may lose out on something, they will want it even more. Not only do they want the thing that is being bid on, they also want to win, just to win. Taking advantage of someone's competitive nature can drive up the price. Brinksmanship: One party aggressively pursues a set of terms to the point at which the other negotiating party must either agree or walk away. Brinkmanship is a type of "hard nut" approach to bargaining in which one party pushes the other party to the "brink" or edge of what that party is willing to accommodate. Successful brinksmanship convinces the other party they have no choice but to accept the offer and there is no acceptable alternative to the proposed agreement. Bogey: Negotiators use the bogey tactic to pretend that an issue of little or no importance to him or her is very important. Then, later in the negotiation, the issue can be traded for a major concession of actual importance. Chicken: Negotiators propose extreme measures, often bluffs, to force the other party to chicken out and give them what they want. This tactic can be dangerous when parties are unwilling to back down and go through with the extreme measure. Defence in Depth: Several layers of decision-making authority is used to allow further concessions each time the agreement goes through a different level of authority. In other words, each time the offer goes to a decision maker, that decision maker asks to add another concession in order to close the deal. Deadlines: Give the other party a deadline forcing them to make a decision. This method uses time to apply pressure to the other party. Deadlines given can be actual or artificial. Flinch: Flinching is showing a strong negative physical reaction to a proposal. Common examples of flinching are gasping for air, or a visible expression of surprise or shock. The flinch can be done consciously or unconsciously. The flinch signals to the opposite party that you think the offer or proposal is absurd in hopes the other party will lower their aspirations. Seeing a physical reaction is more believable than hearing someone saying, "I'm shocked." Good Guy/Bad Guy: The good guy/bad guy approach is typically used in team negotiations where one member of the team makes extreme or unreasonable demands, and the other offers a more rational approach. This tactic is named after a police interrogation technique often portrayed in the media. The "good guy" will appear more reasonable and understanding, and therefore, easier to work with. In essence, it is using the law of relativity to attract cooperation. The good guy will appear more agreeable relative to the "bad guy." This tactic is easy to spot because of its frequent use. Highball/Lowball: Depending on whether selling or buying, sellers or buyers use a ridiculously high, or ridiculously low opening offer that will never be achieved. The theory is that the extreme offer will cause the other party to reevaluate his or her own opening offer and move close to the resistance point (as far as you are willing to go to reach an agreement). Another advantage is that the person giving the extreme demand appears more flexible he or she makes concessions toward a more reasonable outcome. A danger of this tactic is that the opposite party may think negotiating is a waste of time. The Nibble: Nibbling is asking for proportionally small concessions that haven't been discussed previously just before closing the deal. This method takes advantage of the other party's desire to close by adding "just one more thing." Snow Job: Negotiators overwhelm the other party with so much information that he or she has difficulty determining which facts are important, and which facts are diversions. Negotiators may also use technical language or jargon to mask a simple answer to a question asked by a non-expert. How to Overcome the Top Ten Negotiating Tactics Everyone uses negotiation tactics to get what they want. Most of the time, when you enter a negotiating situation you can expect the other party to use certain maneuvers to tip the scales in their favor. For example, you can expect a potential employer to offer you less money than they are actually willing to pay to give themselves negotiating room. And a buyer will usually act surprised at your stated price, no matter how reasonable it may be, to pressure you into lowering it. Everyone uses these tactics, but that doesn’t mean that negotiations can’t be fair. Some tactics are acceptable, while others are downright sleazy. Tactics are part of the process, and you can use them and still maintain your negotiations on an honest level. In other words, the use of tactics doesn’t necessarily mean tricking or manipulating people. Some tactics are simply tools to expedite the negotiation process; others are used to take advantage of the other person. To be successful in negotiations, you must be able to differentiate between the fair and unfair negotiation tactics so you can use the good ones to your advantage and deflect the questionable ones. Consider the following ten negotiation tactics and the methods you can use to deflect them: Tactic #1: The Wince: The wince can be explained as any overt negative reaction to someone’s offer. For example, you might act stunned or surprised when your negotiating counterpart names their terms. This tactic tells your counterpart that you know your limits, which isn’t under-handed or dishonest. And wincing at the right time can potentially save you thousands of dollars. Keep in mind that when deals are negotiable, your counterpart will start high. Of course, you won’t always be the wincer. Many times, especially in the sales profession, you’ll be on the receiving end of the wince. In this case, you can counter with the next tactic. Tactic #2: Silence: In the negotiation process, silence can be your strongest tool. If you don’t like what your counterpart has said, or if you’ve made an offer and you’re waiting for a response, just sit back and wait. Most people feel uncomfortable when conversation ceases, and they start talking automatically to fill the void. Almost without fail, your counterpart will start whittling away his or her position when you use this tactic. So what if you find yourself negotiating with a person who understands the importance of silence as well as you? Rather than wasting time in silence, restate your offer. Don’t make suggestions; just repeat your terms. This maneuver forces the other person to respond, and more often than not, they respond with a concession. Tactic #3: The Good Guy/Bad Guy Routine: This sleazy tactic is often used in movies, where two detectives are interrogating a person who’s just been arrested. One detective seems unreasonable and inflexible, while the other tries to make it look like he or she is on the suspect’s side. This tactic is designed to get you to make concessions without the other side making any in return. If you find yourself in a good guy/bad guy situation, the best response is to ignore it. Recognize this game for what it is, but don’t play along and don’t allow the good guy to influence your decision. The best technique is to let your counterparts play their game, while you watch out for your own interests. Tactic #4: Limited Authority: This tactic is a variation on the good guy/bad guy routine, but instead of two people working over you, the one person you’re dealing with tells you that he or she must approve any deals with an unseen higher authority. Sometimes, this higher authority exists, but other times your counterpart will create this figure to gain an edge in the negotiation process. So just because your counterpart tells you, “It’s out of my hands,” don’t automatically assume the person is being honest. In this type of situation, two options exist: one, ask to deal directly with this so-called higher authority; or two, test the limits of your counterpart. Tactic #5: The Red Herring: This technique comes from fox hunting competitions, where one team drags a dead fish across the fox’s path to distract the other team’s dogs. At the bargaining table, a red herring means one side brings up a minor point to distract the other side from the main issue. Effective and ethical negotiators generally agree that this tactic is the sleaziest of them all. When your negotiation process is bogged down with a minor problem, and your counterpart insists on settling it before they even talk about more important issues, then you are probably dealing with a red herring. In this case, use extreme caution, and suggest setting the issue aside temporarily to work out other details. Tactic #6: The Trial Balloon: Trial balloons are questions designed to assess your negotiating counterpart’s position without giving any clues about your plans. For example, you may ask your counterpart, “Would you consider trying our services on a temporary basis?” or “Have you considered our other service plans?” Essentially, these types of questions put the ball in your counterpart’s court, and the nice part about them is they aren’t really offers. They allow you to gain information without making a commitment. When you’re on the receiving end of a trial balloon question, you may feel compelled to answer it thoroughly. To maintain your edge, resist this temptation and counter with another question. For example, if someone asks, “Would you consider financing the house yourself?” respond, “Well, if I did, what would your offer be?” Tactic #7: Low-Balling: Low-balling is the opposite of the trial balloon. Instead of tempting you to make the first offer, your counterpart will open the process with a fantastic offer. Then after you agree, they start hitting you with additional necessities. For example, say you see an ad for a product priced lower than other stores. But then after you agree to buy, the sales representative uncovers the hidden costs, such as shipping or installation. In the end you probably pay more than you would have at another store listing a higher price on the product. To avoid falling victim to this tactic, ask your counterpart about additional costs before agreeing to any deal. Tactic #8: The Bait-and-Switch: Similar to low-balling, the bait-and-switch tactic should be avoided. Your counterpart may try to attract your interests with one great offer, but then hook you with another mediocre one. This tactic will almost always burn you, unless you can recognize it. If your counterpart were really able to offer a genuinely good deal, they wouldn’t have to resort to bait-and-switch. Tactic #9: Outrageous Behavior: Outrageous behavior can be categorized as any form of socially unacceptable conduct intended to force the other side to make a move, such as throwing a fit of anger or bursting into tears. As most people feel uncomfortable in these situations, they may reduce their negotiating terms just to avoid them. However, the most effective response to outrageous behavior is none at all. Just wait for the fit to die down before reacting, because emotional negotiations can result in disaster. Tactic #10: The Written Word: When terms of a deal are written out, they often seem non-negotiable. The best defense against this tactic is simply to question everything, whether it appears in writing or not. You’ll inevitably run into some standard, non-negotiable documents, but it never hurts to ask questions. You may be surprised how many contracts actually are negotiable when challenged. Better Negotiations in the Future: People have used these ten negotiation tactics for years, but that doesn’t mean they are always fair. So before you rush into your next negotiation situation, make yourself aware of these tactics and how they affect the process. When you learn the uses and defenses of these negotiation techniques, you can reach more mutually beneficial agreements. Source: John Patrick Dolan, Negotiate like the Pros™, LawTalk Publications (January 1, 2001) International Negotiation / Cross –Cultural Negotiations International negotiation is often a process of power-based dialogue intended to achieve certain goals or ends, and which may or may not thoroughly resolve a particular dispute or disputes to the satisfaction of all parties. International negotiation can be bilateral or multilateral, public or secret, and can involve different forms of negotiation among states and non-state civilian actors, as well as with anti-state actors, such as individual terrorists and terrorist organizations. In addition, different cultures may engage in negotiations with different styles and for different purposes, with different expectations. Negotiation aimed at conflict management seeks to limit or minimize tensions and disputes as much as possible, without necessarily changing the status quo or the relations of power, values, and interests between the disputing parties. Negotiation aimed at conflict transformation seeks to go beyond the status quo to transform relations of disputed power, values, and interests in a more “positive” and less controversial direction although largely expecting a number of disputes and differences to remain. Conflict resolution is generally seen as an even longer-term process that attempts to find a common and complete agreement among the different parties despite their different values, interests, and power relationships. Negotiation is an unavoidable part of any international business and an important instrument of international business communication. International business negotiations have many characteristics that distinguish them from negotiations in the domestic markets mainly due to cross-cultural factors. A lot of studies conducted are focusing on the effect of culture in specific countries. John Graham (2003) has done studies in the negotiation styles of business people in 16 countries. Graham found that there were significant differences in the negotiation process in the countries that he studied. Although negotiators from different countries obtained the same outcome, the way they negotiated was different. National culture programming leads to patterns of thinking, feeling and acting. The behavior of the negotiators is strongly influenced by their cultural background, which defines the range of strategies negotiators develop as well as tactics and communication styles they implement. Successful negotiations require understanding of each party's culture and may also require adaptation of the negotiation strategy so it is consistent with the other party's culture (Hollensen 2001). Cultural differences in negotiations tend to occur for two main reasons. First, when confronting cultural differences, people tend to rely on stereotypes. Stereotypes are often pejorative (for example: Italians always run late), and they can lead to distorted expectations about your counterpart’s behavior as well as potentially costly misinterpretations. Instead of relying on stereotypes, try to focus on prototypes—cultural averages on dimensions of behavior or values. A second common reason for cross-cultural misunderstandings is that we tend to interpret others’ behaviors, values, and beliefs through the lens of our own culture. To overcome this tendency, we need to learn about the other party’s culture. Culture is a major element of international business negotiations. It is often compared to an iceberg; there is more to it than meets the eye. These hidden elements, if not understood, can make or break an international business transaction. It is thus important to be aware of cultural influences on negotiations. Salacuse, a leading expert on negotiations, has identified the ten most important cultural factors that affect business negotiations. These “top ten” elements of negotiating behaviour constitute a basic framework for identifying cultural differences that may arise during the negotiation process. Applying this framework in your international business negotiations may enable you to understand your counterpart better and to anticipate possible misunderstandings. Source: Salacuse, J.W., Negotiating: The Top Ten Ways That Culture Can Affect Your Negotiation, IBJ (2004) The ten negotiating traits can be placed on a spectrum or continuum, as illustrated in the chart below. The Impact of Culture on Negotiation Negotiation Factors
Negotiating Goal The purpose of negotiations varies among cultures. For some cultures, the primary goal of negotiations is to reach a deal and sign a contract (North American culture), while other cultures (Asian cultures) view it as the establishment of a long term relationship between the parties which will eventually lead to a contract. Salacuse found that whereas 74 percent of the Spanish respondents claimed their goal in a negotiation was a contract, only 33 percent of the Indian executives had a similar view. Negotiating Attitude Parties from different cultures tend to come to the negotiation table with a win-lose or win-win attitude. The win-win negotiators view the negotiations as collaborative efforts where both parties gain, whereas the confrontational nature of the win-lose negotiators usually results in one side winning and the other losing. For example, whereas 100 percent of the Japanese respondents claimed that they approached negotiations as a win-win process, only 33% of the Spanish executives took that view. Personal Style: Informal or Formal? Culture strongly influences the personal styles of negotiators. Negotiators with a formal style tend to address their counterparts by their titles and avoid discussing personal matters. In contrast, negotiators with an informal style tries to start the discussion on a first-name basis and tend to quickly establish a friendly relationship. For an American, calling someone by the first name is an act of friendship and therefore a good thing. For a Japanese, the use of the first name at a first meeting is an act of disrespect and therefore bad. Communication: Direct or Indirect? Cultures can differ in preferred communication styles. Some cultures value direct and simple methods of communication whilst others prefer indirect and complex methods such as the use of figurative forms of speech, facial expressions and body language. In a culture that values directness, such as the American or the Israeli, you can expect to receive a clear and definite response to your proposals and questions. In cultures that rely on indirect communication, such as the Japanese, reaction to your proposals may be gained by interpreting seemingly vague comments, gestures, and other signs. What you will not receive at a first meeting is a definite commitment or rejection. Sensitivity to Time: High or Low? Attitudes to time vary among cultures. It is said that Germans are always punctual, Latins are habitually late, Japanese negotiate slowly, and Americans are quick to make a deal. For Americans, the deal is a signed contract and time is money, so they want to make a deal quickly. Americans therefore try to reduce formalities to a minimum and get down to business quickly. Japanese and other Asians, whose goal is to create a relationship rather than simply sign a contract, need to invest time in the negotiating process so that the parties can get to know one another well and determine whether they wish to embark on a long-term relationship. This reflects their contrasting views on the purpose of a negotiation. Emotionalism: High or Low? Some cultures show their emotions at the negotiation table, while others hide their feelings. According to the stereotype, Latin Americans show their emotions at the negotiating table, while the Japanese and many other Asians hide their feelings. Obviously, individual personality plays a role here. There are passive Latins and hot-headed Japanese. Nonetheless, various cultures have different rules as to the appropriateness and form of displaying emotions, and these rules are brought to the negotiating table as well. Deal makers should seek to learn them. Form of Agreement: General or Specific? Culture affects the form of the written agreement. Americans prefer very detailed contracts where all the possible eventualities and risks have been anticipated. This is because the contract is governed by law. In contrast other cultures, such as the Chinese, prefer a contract in the form of general principles rather than detailed rules. as the foundation of the contract lies in the relationship between the parties. Building an Agreement: Bottom up or Top Down? Some cultures tend to start negotiating on general principles and then proceed to details, i.e. bottom up approach or the inductive process. In contrast, others prefer to first obtain agreements on specific details such as price and delivery dates and merge all the details to arrive at the final contract, i.e. a top down approach or the deductive process. According to many observers, Americans tend to favor the building-down approach, while the Japanese tend to prefer the building-up style of negotiating a contract. Team Organization: One Leader or Group Consensus? Cultural values greatly influence how a negotiation team is organised and the decision making power and process. Some cultures give more importance to individuals whilst others to the group. One extreme is the negotiating team with a supreme leader who has complete authority to decide all matters. Many American teams tend to follow this approach. Other cultures, notably the Japanese and the Chinese, stress team negotiation and consensus decision making. In the first type, the negotiating team is usually small; in the second it is often large. Risk taking: High or Low? It is observed that some cultures are more risk averse than others. (Geert Hofstede, Culture’s Consequences: International Differences in Work-related Values (Newbury Park, CA: Sage Publications, 1980). This influences the behaviour of the negotiating counterparts whether they will reveal information and how they deal with uncertainties. The Japanese, with their emphasis on requiring large amount of information and their group decision-making process, tend to be risk averse. Americans, by comparison, are risk takers. Faced with a risk-averse counterpart, how should a deal maker proceed? The following are a few steps to consider: 1 Don’t rush the negotiating process. A negotiation that is moving too fast for one of the parties only heightens that person’s perception of the risks in the proposed deal. 2 Devote attention to proposing rules and mechanisms that will reduce the apparent risks in the deal for the other side. 3 Make sure that your counterpart has sufficient information about you, your company, and the proposed deal. 4 Focus your efforts on building a relationship and fostering trust between the parties. 5 Consider restructuring the deal so that the deal proceeds step by step in a series of increments, rather than all at once. With the knowledge of the ten negotiating traits discussed above, you may be better able to understand the negotiating styles and approaches of counterparts from other cultures. Equally important, it may help you to determine how your own negotiating style appears to those same counterparts. It is also essential to take into account five considerations for analyzing cross-cultural negotiations given by Fisher, a well-known intercultural expert: (1) the players and the situation; (2) styles of decision making; (3) national character; (4) cross-cultural noise; (5) interpreters and translators. Each consideration presents questions that should be answered before entering international negotiations. Different Cross-Cultural Negotiating MethodsUnderstanding how to properly integrate your own personal negotiation style into a cross-cultural setting is vital for success in global markets. Make sure you do your research before you engage in a negotiation with someone from a different culture. The following tips should serve you well prior to any future cross-cultural negotiation: 1) Learn a bit about the culture you are going to be negotiating with – go online, read books or even better find someone from that culture willing to answer questions. 2) Understand their expectations from the negotiation process – prior to the meeting, pick up the phone or send an email with an agenda and some ideas on what you seek to achieve in order to prompt similar preferences from the other side. 3) Be clear with yourself about the stance and strategy you are going to take – if you feel you need to adopt a new strategy, i.e. being more relationship focused rather than business orientated or listening more than talking, then make sure you sit down and think it all through. 4) Don’t jump to assumptions and conclusions in the negotiation process – if someone says or does something that seems really odd, the chances are it isn’t. Think about possible cultural reasons behind the behavior and try not to rationalize according to your own view of the world. 5) If you sense confusion always clarify and re-check for understanding – when it’s impossible to work out what’s going on, put the brakes on and ask. Simply expressing your willingness to learn or show sensitivity can lead to good things. 6) Speak slower, avoid fancy language and keep it simple – always, always, always temper your language. Think how you would feel being in another country trying to negotiate in another language. 7) Use your active listening skills – it’s always a good policy to ask questions, sit back and listen to the answers. The more you let the other party speak, the more information you will have to use to your advantage. 8) Explain the decision making process from your side and ask for them to clarify theirs – who makes the decisions tends to differ from culture to culture. In more hierarchical countries, it is usually always the boss who has the final say. Outline how it works from your end and elicit the same from them so you are able to plug any potential gaps in terms of information or next steps. 9) Pay attention to potential gender dynamics – if you are working across cultures and genders, make sure you are fully aware of any sensitivities. For example, some Muslims tend not to shake hands with the opposite sex. In some cultures they may assume that the woman present is not of consequence whereas in reality they may be the decision maker. 10) Keep it professional no matter how challenging it may get – even if the negotiations are testing your patience always remain courteous and keep it to business. Some cultures like to test and prod the other party to gauge their trustworthiness factor. Others may take any loss of temper as disrespectful and soon kill off any further discussions. To conclude, every culture has a different way of viewing the world and therefore a different way of negotiating. There are some cultures that like to have a team of negotiators rather than just a single negotiator. Other cultures want to create a friendly relationship. That is to say, they may want to know the person with whom they’re doing business. Others care little about the people and just want the contract signed or price agreed. There are cultures that like to stay silent and others that have a penchant for storming out of negotiations. Some cultures see the negotiation as a battle that must be won; others want a win-win outcome. These differences stem from cultural backgrounds. Thus, understanding differences can prevent misunderstanding between individuals and create mutually beneficial business relationships.
Recommended Textbooks & Resources 1. Hofstede G., (1980). Culture’s Consequences: International Differences in Work-Related Values, Beverly Hills, CA: Sage 2. Hall E.T., (1981). Beyond Culture: Perspective in Practice (2nd. ed.), Garden City, NY: Anchor/Doubleday 3. Lewicki, R., Saunders, D., Minton, J. And Barry, B. 2006. Negotiations. New Yourk: McGraw-Hill Irving. 4.Lewicki, R. 2011. Essentials of Negotiations. New Yourk: McGraw-Hill Irving. 5. Roger Fisher and William L. Ury, Getting to YES: Negotiating Agreement Without Giving In, Penguin Group (1981) 6. Salacuse, J.W. 2003. The Global Negotiator: Making, Managing and Mending Deals Around the World in the Twenty-first Century. New York: Palgrave Macmillan. 7. Salacuse, J.W., Negotiating: The Top Ten Ways That Culture Can Affect Your Negotiation, IBJ (2004). 8. Thomson, L.L. 2005. The Mind and Heart of the Negotiator. Upper Saddle River, NJ: Pearson Education International. 9. Trompenaars, A., Wooloams, P. (2003) Business Across Cultures. Oxford: Capstone.
11
|