Reading: Mental errors: How to recognize and avoid them

Mental errors: How to recognize and avoid them

This chapter presents the various mental errors committed by the parties during the negotiation. According to the article, 5 kinds of mental errors can be bringing forward:

The first one is the escalation. This kind of error occur when calm businessman entered in a difficult and competitive negotiation, it is also called “over commitment”. For the authors, there is 3 possible reasons explaining why wise businesspeople make this error:

-       Because negotiator never want to lose a deal especially when it is highly visible; therefore, they are ready to make very unreasonable measures.

-       Within the framework of auctions and bidding contest where people are pit against each other, which encourage irrational behaviour.

-       When businesspeople use the other people’s money to win beyond the point of rationality.

To correct the situation, it is necessary to control the alternatives of the deal before the negotiation keeping in mind that money spend in overpriced deal can be invested in other compromises. Negotiators must be very objective and observational where they are fixing the walk-away price and defined clear breakpoint to stop the negotiation when they have reached the walk-away price. However external factor can affect this price, so negotiators need to be open to recalculate it.

The second one is partisan perceptions defined as a psychological phenomenon that causes people to have different views of the world according to their point of view. To avoid partisan perceptions, negotiator should know how to stand outside a situation by recognizing it, putting themselves in the other side’s position, asking the opinions of their colleagues, posing the problem as it appear to themselves or using a hypothetical situation. They also can reverse the role with the other party.

The third one is irrational expectations. In this scenario, the expectations of one side cannot be meet which remove any zone of possible agreement (ZOPA). To overcome this problem both side may have an educating dialogue where people are listening to the expectations of each, and the negotiator should give more information to increase the reservation price of the opposite party.

The fourth mental error is overconfidence. When businesspeople overestimate their strengths and underestimate those of our rivals they can lose a deal. It can also be related to another mental error called “groupthink”. This error appears when businesspeople are part of a cohesive group thinking around a norm. People are driven by social psychological pressures and reject any opposite views. For the authors groupthink are characterized by an illusion of invulnerability and certitude, people accept only certificated data and alternatives are not taken into account. Any form of external opinion or view is directly denied.

Finally, the last mental error is unchecked emotions. Bad things appear when the businesspeople lose the control of their emotions and that the negotiation start to be running by anger. In that situation, people stop thinking in logical or rational way. The only goal of the deal become damaging the other side, affecting negatively its own interests at the same time. Big injuries occur when negotiator get their feelings out of control. To resolve this situation, a period of reflexion is necessary and an objective moderator can be called to moderate the communication.   

Reading: The hidden challenge of cross-border negotiation

The hidden challenge of cross-border negotiation

In international deal, negotiators have to manage with local traditions and customs because it is directly linked with the shape of governance and the decision-making process. Cultural differences influence the business and can completely turn a deal to a failure if some cultural tendencies are not respected. In fact, from a country to another the perception of the individual or the group in a company, the importance of time in negotiation is very different. The negotiator must consider in depth the cultural tendencies and not only the protocol because an attitude can be misunderstood or considered as disrespectful by certain cultures. In cross border negotiation, the way to reach agreement the process or the decision making can diverge from culture to culture due to different behaviours and core beliefs and not only legal regulations.

In all negotiations, there is always many people involved in the deal, influencing more or less the final decision. This is why it is very important to identify all the players committed into the negotiation. Abroad there is always extra players in the compromise and can make the decision making even more difficult. Indeed, applying “home” views or principles of corporate governance and decision making to international negotiation can affect negatively the negotiation process.

Moreover, in a cross-border negotiation the people who decide can vary. Therefore, stakeholder need to know who decides what to avoid any failure to understand each player’s role. Recognize who has formal decision rights in negotiation id more difficult cause of suppositions on culture. In less familiar environment, it is crucial to understand both formal decision rights and cultural background.

Furthermore, knowing which people are going to finalized the deal is essential but not enough because negotiators need to also know what are the informal influences that can make or break a deal. In fact, many countries have powerful networks of influence which have more potential than the parties including in the deal. For instance, it can be insurance companies or big families.

It is very frequent that companies with strong legal systems underestimate the power of informal influences or external factors because they presume that the foreign legal systems will enforce the same formal dispositions as the one they have in their country. Obviously, there is a huge gap between the laws written on codes and their application in practice.

In a word, a successful cross border negotiation evolves eliminate any home markets guesses and the development of a clear view of the players who are likely to influence the decision-making process. In every negotiation, each party try to influence the issue of the organizational process, process different in all the cultures involving different negotiation strategies. It can take 3 different forms: top down, consensus and multistage coalition building. In the top down form, the negotiator tries to enter in contact directly with the boss or with people outside the process. In some cultures, its more effective to interact directly to the top of the organization.  But this strategy need to be taken carefully because subordinate players can have opportunities to fail the deal.

Then, a consensus require agreement among the members of the other side, from the broader enterprise and external stakeholders and governments. The need for consensus affect the negotiating strategy. There are cultures where consensus is the base of the negotiation, they are focus on the relationships more than the deal and take a lot of time to investigate about the other side and try to create a strong relation before the deal. In that situation relations are more important than the deal itself. The consensus is always linked with a high demand of information asked by the other side. Each party need to be prepared to provide all the information necessary to convert the potential doubters. The negotiators should focus on the interaction with the other side and try to reach an internal position rather than be concentrated on the bargaining table. At the end, the party need to adjust their own expectations of how long the deal will take. A decision taken in a slow negotiating process is more durable and the agreement is reaching more quickly. In the case of consensus, deal require more time, more relationship buildings and more information.

At least, some decision processes are less defined or not require the agreement of every players, they are called “winning coalition”. And when the interests cannot overrule the negotiation, a “blocking coalition” can totally stop the deal.

To conclude, it appears that cultural fidelity is not always simple because every individual represents various cultures with divers negotiation styles. To manage cultural differences in a deal it’s important to compile the governance and the decision-making processes which can take very different forms in a culture from another one. Design the strategy and elaborate the tactics to reach the right people with the right arguments is the best way to complete a successful sustainable deal.      

General cultural differences not only influenced negotiation, but also affect the expectations of a specific process. It concerns the view of the process, the approach in the creation of the agreement, the form of the agreement and its implementation.

Reading: When an angry public wants to be heard

When an angry public wants to be heard

It is always easier to find solutions in case of conflict when negotiators get along well, but when they are upset, both sides totally forget they are still in a negotiation. When companies have to face very angry customers they skip the value creation step in negotiation and they most of the time forgot to work for their own best interests. According to communication specialists, companies in this kind of situation should focus on the message control, revealing as little as possible, deny their responsibility and try to avoid any discussions which can favour adversaries’ views. Generally, in a crisis, the only thing an angry customer wants most is to be heard. If both sides stay on their initial positions, very little progress will be made. Therefore, it is very important to be open to negotiation, leading to a mutually beneficial agreement in order to create value.

This chapter identify 6 principles to help companies facing an angry public.

The first one is acknowledging the concerns of the other side. Taking this time will allow negotiators to avoid making big concessions. The best strategy is to express empathy of the public’s concerns without accepting responsibility.

The second one is encouraging joint fact finding by developing a shared analysis or forecasts. This process is describing in 5 points: by mutual agreement the company should choose a group of experts with different disciplinary background to encourage the confrontation between different opinions and views, then they should work with these experts to develop scientist’s questions, creating areas of consensus or disagreements, question the expert’s analysis with the help of an outsider and finally ask the experts to interpret their findings. All this procedure will ensure useful information counted in the negotiation.

The third principle consists in offering contingent commitments. After the previous step, it is necessary to develop a potential commitment that will satisfy both parties. These kind of promises takes place only when standards are exceeded or deadlines missed and they allow negotiations to move forward.

The fourth principle is to accept responsibility, admit mistakes and share power. The best way to create new agreements is to accept responsibilities. In fact, injured parties need to know that past mistakes are not going to be repeated and that their difficult situation was considering.

The fifth principle is always acting in a trustworthy manner. For the authors, there are 2 fundamentals rules for building trust and create piece of advice: “say what you mean and mean what you say”. This mean that is necessary to be honest in the negotiation and not to try to hide the truth because if the other side find it out, the party will lose confidence forever.

The last one is to focus on building long term relationships and always be concern about the future of the relations between both sides. To ensure the implementation of whatever agreement, both parties need to work in a decent working relationships. For instance, in case of rupture between both parties during the negotiation it is very difficult to fix the problem and find an issue to go further. Thus, it is very important to take into account the relationships between every members of the deal. 

            To conclude, all these principles are necessary before reaching an agreement but they are not sufficient in case of high conflict. Each stakeholder need to make an effort when they are strongly opposed.