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BARGAINING FOR
ADVANTAGE
By
G. Richard Shell
Penguin Books, June 2000
ISBN 0 14 02.8191 6
286 pages
This book is a guide to better negotiation practice, not a substitute for it. It will
show that while negotiation is not a rocket science, it is not simple intuition either.
No matter who you are, your intuition will fail you in important bargaining
situations. To improve, you need to shed your assumptions about the process
and open yourself to new ideas. The approach to negotiation this book uses is
called Information-Based Bargaining. This approach focuses on three main
aspects of negotiation: solid planning and preparation before you start, careful
listening so you can find out what the other side really wants, and attending to
the “signals” the other party sends through his or her conduct once bargaining
gets underway.
A Story
Two men entered a conference room in an office tower high above Lexington
Avenue in New York City. On one side of the table sat Peter Jovanovich, the
Chief Executive of Harcourt Brace Jovanovich (HBJ), a company now on the
edge of financial ruin. As the son of one of the firm’s founders, Jovanovich was
deeply committed to preserving the family’s legacy. Across the table sat Dick
Smith, the aggressive leader of General Cinema, a large conglomerate probing
for a corporate foothold in the publishing business. Both sides have carefully
prepared their “scripts” for the opening of the negotiation. Smith was to be a
suitor and had planned a detailed presentation on General Cinema’s financial
strength and reputation. Jovanovich’s team, was also very positive about the
deal, and prepared Jovanovich for the role of “listener.” He would be interested
but noncommital. He would not tip his hand or show his urgency.
On cue, Smith began his opening speech, but within seconds Jovanovich
interrupted. The HBJ advisers stirred. This was not in the script. Jovanovich
spoke and placed a small box on the table between him and Smith. “My father
always gave a watch like this to his partners at the beginning of a new business
relationship,” he said. “This is meant to signify my sincere belief that General
Cinema is the right buyer of HBJ.” It was a risky admission, and both men knew
it.
What is Negotiation?
A negotiation is an interactive communication process that may take place
whenever we want something from someone else or another person wants
something from us.
Some people have a wide “bandwidth” when it comes to bargaining styles. They
can adapt easily to many different types of situation and “opponents.” Others are
more limited in their range of effective action. They may be quite strong in
situations requiring competitive instincts but weak when it comes to relationships.
Or they may be strong in cooperative skills and weak if the situation calls for
hardball tactics.
Many negotiation experts try to teach people a single, all-purpose style, which is
often not helpful or realistic. Your job is to find out who you are as a negotiator
and then work to be more effective with the skills you have – not try to become
someone you are not.
What predispositions do you bring to the bargaining table? Are you a cooperative
sort of person, striving to meet everyone’s goals so people leave the negotiation
table feeling good? Or are you a more competitive type who is less concerned
with how the other party feels and more interested in how well you do?
Information-based bargaining proceeds from the assumption that you will get
better results for yourself and achieve more for others who depend on you by
tirelessly searching for key information about the parties and the situation. Your
success then turns on using this information skillfully as bargaining goes forward.
and something that has matured into a genuine expectation? Basically one thing:
your attitude. Goals are things we strive toward that are usually beyond the range
of our past achievements. Such things as investment goals, weight loss goals,
and athletic goals are typical. We set goals to give ourselves direction but we are
not greatly surprised or disappointed if we fall short.
Second, your clarity will communicate confidence and resolve to the other party.
You will convey the message that you have high expectations for both yourself
and the deal. And perhaps no other personal variable makes such a difference in
negotiation as the quiet feeling of confidence, self-esteem, and commitment that
emanates from people who know what they want and why they should get it.
• Build working relationships across the table with small steps such as gifts,
favors, disclosures or concessions.
• Avoid reciprocity and relationship traps like trusting too quickly, letting others
make you feel guilty and mixing big business with personal friendships.
• Always follow the “Rule of Reciprocity”:
• Be reliable and trustworthy
• Be fair to those who are fair to you
• When other parties treat you unfairly, let them know about it
The lesson here is simple: Find the shared interests that will motivate negotiators
on the other side to agree with your proposal and explore why they might say
“no.” These inquiries will give you a checklist for proceeding with the negotiation.
Lead with the areas you have in common, then probe for and try to meet the
other side’s objections one by one with the lowest cost concessions you can
make. As you move into the areas in which you have genuine and significant
conflicts, you will have gained the momentum you need to keep talks going.
Watch out for the common misconceptions about leverage. Even less powerful
people can have leverage in any given situation. And leverage is a dynamic
factor based as much on perception as fact. Finally, you can gain power within
an organization by showing passionate commitment rather than cool indifference.
That is just the opposite of the way leverage works in most market transactions.
Ask yourself, which side has the most to lose from no deal? For whom is time a
factor? Can I improve my alternatives or make the other party’s worse? Can I
gain control over something the other party needs? Can I commit the other party
to norms that favor my result? Can I form a coalition to improve my position?
Preparation
Good preparation, like in most endeavors, is a crucial part in the negotiation
process. First, using the Situational Matrix, you should determine the basic
situation you face. What strategies are best suited to deal with the situation?
Next, you need to combine your situational analysis with the knowledge you have
about your own stylistic preferences to determine how well suited you are to
negotiate the problem. If you are basically non-confrontational, you will have a
hard time doing well in a Transaction unless you are negotiating against
someone just like yourself. If you are aggressively competitive, you will lack
some of the tact needed to handle a Relationship situation that calls for delicate
diplomacy.
Third, try to imagine how the other party views the situation. Do they see the
relationship as important? Do the stakes matter as much to them as they do to
you? The situational analysis prepares you to anticipate the range of strategies
the other side can be expected to use.
Finally, combine the information you have gathered on the situation with your
insights into the Six Foundations to develop a specific bargaining plan. Use this
plan to formulate a list of questions to ask the other side early in the discussion
phase to test your assumptions.
If all this sounds like too much work for the time you have available, remember
that even a few minutes spent reviewing the Six Foundations and the Situational
Matrix before you start will yield significant benefits. In fact, research indicates
that the single most important step in becoming an effective negotiator is
acquiring a habit of preparation. John Wooden, the legendary basketball coach,
once summed up the truth about preparation with a phrase: Failing to prepare is
preparing to fail.
The preliminary information exchange stage has ended and the bargaining stage
has begun when one side or the other makes a concrete plausible opening offer
that requires a reciprocal response.
Making Concessions
As you move through the opening and concession-making stage, remember that
your strategy and tactics should be determined by three main elements: the
situation, your leverage, and your own and your counterpart’s style.
Each of the four quadrants in the Situational Matrix carries its own presumed
best concession strategy: competitive for Transactions, accommodating for
Relationships, and interest-based problem solving for Balanced Concerns.
Compromise is a useful tool – though not a preferred strategy – in all three
situations.
As your leverage goes down, your need to soften your approach rises. And as
your leverage rises, your need to accommodate goes down – regardless of the
situation you are in.
And a word of advice for competitive people: When you lock horns with another
competitive negotiator, the risk of impasse is high. You should remember that
you are there to deal, not win a war. Look for face-saving, neutral methods to
defuse any bargaining crises you help create.
Yet holding out poses risks, too. The other side may have genuine leverage and
take its business elsewhere. Firmness can also lead to impasse. Although
disagreement often prompts parties to become more creative in their search for
solutions, it can also put deals and relationships in jeopardy. How you close
Finally, negotiations are not over until the parties have secured commitments to
performance. Agreements alone are not enough unless the relationships and
trust between the parties are deep and stable. The secret of making
commitments is simple: Set the situation up so the other party has something to
lose if it fails to perform. And be willing to take a similar step yourself.
How do you balance these two contradictory factors? There are three
frameworks for thinking about ethical issues: the Poker School, the Idealist
School, and the Pragmatist School. Nonetheless, you are better off sticking to
your own tried and tested rules as much as possible. Where you come out on
bargaining ethics, of course, is a matter for you to decide. But remember:
Negotiators who value personal integrity can be counted on to behave
consistently, using a thoughtful set of personal values that they could, if
necessary, explain and defend others.
Personality and style are crucial variables in negotiations. The more you know
about your own style, the better you will be able to take advantage of your
strengths and compensate for your weaknesses. Moreover, your understanding
of your own style will greatly help you in interpreting the style and personality of
the people you face.
Do not rely too much on stereotypes, however, whether of the gender or cultural
sort. Your judgments about other people at the bargaining table are vital to your
success. The best way to make those judgments is to ask questions, listen, and
gather solid information about who they really are as individuals. Then be willing
to admit you were wrong when they do something that surprises you.