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4
Hard Bargainers and Standards
One of my students went to McDonald’s to get some French fries at five minutes to 11:00 one night. The fries were soggy. He asked the counter clerk for fresh fries. The clerk snapped at him in reply, “We’re closing in five minutes!” So the student calmly walked to the end of the counter, picked up a printed copy of McDonald’s freshness guarantee, and walked back to the clerk.
“I’m here at McDonald’s, right?” the student said. The clerk grunted affirmatively. “Well,” the student said, “this freshness guarantee says your food is absolutely fresh during all business hours.” He pointed to the French fries part of the guarantee, which promised “the perfect texture” that customers have come to expect.
“Isn’t this store open until eleven P.M.?” the student added. “It doesn’t say here that this freshness guarantee expires five minutes before closing time, does it?” Did the student get fresh French fries? He did.
Many people would have accepted the soggy French fries, or stormed out, or argued angrily, or otherwise gotten upset. This student decided to calmly use the standards that McDonald’s set for itself. It’s a small thing, for sure, but in thousands of negotiations, large and small, from restaurants to your job to geopolitics, using other people’s standards is a highly persuasive way to achieve your goals.
Using the other person’s standards is one of the great negotiation tools that most people don’t know about. Standards are especially effective with hard bargainers. Few people know about them, fewer people use them, and almost no one understands the psychological levers that enable them to work in all kinds of situations. I’m not talking about “objective” standards, or criteria that you think are fair. Standards are criteria that the other party thinks are fair.
When invoked, they usually work like magic. And you can use this negotiation tool every single day, in some cases more than any other.
Using their standards is important because the world is an unfair place; people and companies violate their own standards all the time. They make service promises and break them. You order something from the store and it is not delivered as promised. They promise great service and treat you terribly. You rely on what they said and then, often unapologetically, they go back on their word. It drives many people crazy. Now, you can calmly use their standards to get what you want.
The late Tim Russert, host of NBC’s Meet the Press, was often praised for his brilliant reporting. One of the things he would do while interviewing national politicians was play back to them, on national TV, previous statements they had made that seemed to contradict their current behavior. The politicians would squirm and then be forced to justify themselves. This was using their standards.
I discovered the power of using other people’s standards as a journalist more than thirty years ago, and refined my use of it as an attorney and businessman. It has been an essential part of our tool kit in my class.
How does it work? It is a fundamental tenet of human psychology that people hate to contradict themselves. So if you give people a choice between being consistent with their standards—with what they have said and promised previously—and contradicting their standards, people will usually strive to be consistent with their standards. Of course, no tool works all the time. But you will get much more from using these tools. People will violate their own standards less often, and you will get what you want more often.
THE POWER OF STANDARDS
A standard is a practice, policy, or reference point that gives a decision legitimacy. It can be a previous statement, promise, or guarantee. Or it can be a practice agreed upon by the other party for a negotiation.
Company policy is a standard. Essentially, it says, “These are our rules.” Another standard, equally powerful, that can be invoked is “Has your company in its history ever made an exception to company policy?” The next time an airline ticket agent tells you it’s $100 to change your ticket, ask whether the company, in its history, has ever made an exception to this policy. If it has, try to fit into one of the exceptions.
Start by trying this negotiation tool with service providers, since they are in the business of serving others and almost always have guarantees or standards of service: cable TV companies, phone companies, airlines, credit card companies, banks, hotels, etc. If you have an issue to bring up, find out what the company says about customer service on its website or in print or TV ads.
If a service representative is unhelpful or rude to you, say to them: “Your ads talk about how customer service reps always try to be helpful to customers. I’m curious—how does that compare to this situation?” People will not hang up, walk away, or punch you out. In fact, they will usually do what you want them to do.
Some years ago a Wharton student, Jason Klein, tried for three years running to get into Penn Law School. He wasn’t admitted the first year; the second year he was on the waiting list and not admitted. The third year he was on the waiting list in late April and needed an answer immediately in order to pursue a joint degree program with Wharton, where he had already completed the first year of a two-year program.
The law school did not usually make waiting-list decisions until the summer—too late for him, given the requirements of course registration and summer plans. So he wanted to be admitted and get an exception, that is, fast consideration. Anyone who knows the application process to a top school understands that his chances seemed to be about zero. Jason was a student in my negotiation class at Wharton, so he asked me what he might do.
I suggested that he go through the Penn Law admissions catalogue and research the school’s standards. Then he should write a letter to the dean of admissions and simply say, “Here’s your standard, here’s how I meet it; here’s your standard, here’s how I meet it; here’s your standard, here’s how I meet it.” At the end of the letter, I suggested he say, “Please tell me where I’m wrong here,” or something similar. All of which he did.
He gave the letters to the admissions office on April 28; he was accepted on May 2. Jason was sure this was not a coincidence, especially since he had been told by the law school that the earliest he would be considered would be June.
Once you recognize the power of using other people’s standards, you see it everywhere. Until then, these tools are invisible. “This process provided a powerful lesson,” said Jason, who is now the vice president and chief investment officer for Memorial Sloan-Kettering Cancer Center in New York. “It is one thing to talk about these tools and concepts. It is entirely another to actually see them work for me when I use them.” In situations where there are no previous standards you can use, look for ways to define standards they will agree to use in the negotiation. A young executive went to Hermès, the expensive French store in New York City, to buy a scarf. It was a $500 scarf, reduced on sale to $250. The young executive asked the salesclerk to gift wrap the scarf, since it was a present for his wife’s birthday. The salesclerk responded, “We don’t gift wrap sale items.” What an outrageous thing to say for a store of that quality. But instead of getting angry, as most people would do (and getting nothing), the executive asked, “So if I paid full price, $500, for this scarf, you would gift wrap it?” “Certainly,” said the salesclerk. The executive responded, “So Hermès these days is charging $250 for gift wrapping?” Did the executive get the scarf gift wrapped? You bet!
There are two basic reasons people will almost always follow their own standards. The first is that their own internal moral compass tells them it’s the right thing to do; they don’t want to admit to themselves they are not honest. The second is that they are concerned that violating the standards they are supposed to follow will annoy or anger a third party important to them: their boss, for example, who upholds the organization’s standards. The person violating the standards would appear unreasonable and, in the worst case, could be fired.
Let’s say you’re asking for something that is perfectly reasonable and the customer service rep on the other end of the phone is being unreasonable. He or she is in fact violating the standards of the company. You can bring the third party into the equation, by asking, “If the CEO of the company himself were on this phone call, would he approve?” What you have done is brought the vision of an 800-pound gorilla into the conversation. The other party now knows that he or she faces a bigger risk in violating the standards of the company.
In doing due diligence on a small cargo airline I bought with a partner in the Caribbean several years ago, I visited various islands to check out the facilities. It was just a company pilot and me, flying in a single-engine plane. It was a lovely, clear afternoon. When we landed in Tortola, in the British Virgin Islands, there was no one in the arrivals lounge but an immigration officer.
The officer gave the pilot a hard time in filling out various forms, even though she knew the pilot and had seen him often over the previous ten years, and the pilot and I both had airport passes. All I wanted to do was to make sure the company’s small office was in order. It was located fifty yards from the arrivals lounge; we could see the building from where we were standing.
I looked around the lounge for a standard. And there on the wall was a plaque that one sometimes sees at tourist destinations. It was a statement from the prime minister of the British Virgin Islands, and it read something like, “Welcome to the British Virgin Islands. Our customs and immigration officers and other service providers value our tourists and other guests and will treat you with courtesy, dignity, and respect.” So I walked over to the immigration officer and said, “Excuse me?” “Yes,” she said, looking up, annoyed. I pointed to the plaque and said, “Are those really the words of the prime minister?” She said, “Yes,” a little more tentatively. I said, “So how do the words of the prime minister compare to this situation?” We were out of there in five minutes. According to the government, the plaque has since been removed.
USING STANDARDS
Here is a possible response to the dry cleaner upon getting a damaged shirt back: “Is it your policy to send shirts back to the customer with fewer buttons than they arrived with?” Certainly it uses standards. But this might feel too aggressive for you. That’s okay. Use the words you are comfortable with. The principle, however, is clear: isn’t it the dry cleaner’s job not to lose buttons?
Or you might say to your spouse or significant other, “Dear, we went to the last seven movies that you wanted to go to. Isn’t it my turn to pick a movie?” Again, you might want to use other words. But what you are doing here is asking the other party if they believe the choice of movies should be distributed fairly between the two of you.
One of the great things about standards is that it is a transparent process. It is NOT manipulative. You can tell the other party exactly what you are doing. If they say, “Are you using standards on me?” you can reply, “Of course! What’s wrong with using your own well-considered criteria as a basis for decision?” Here you’ve made it a standards issue to discuss their standards. “I’m simply asking your company to do what it said it would, right?” Some psychologists label standards as “consistency traps,” and lump them in with manipulation techniques. This gives the wrong idea about standards. You are not trying to trap anyone into anything. You are just trying to get other people to keep their promises, and to do what is reasonable. What’s wrong with insisting on honesty and fairness?
What do you do if the other person decides to violate their standards and be dishonest? Well, they become more extreme, which has its own risks, as I will explain shortly.
The next point to keep in mind is that you can hurt people with these tools. There is no doubt that they work; your decision will be how far to go with them.
Here’s an example of how using standards can hurt people. It involved the brainwashing of U.S. prisoners of war in the Korean War in the early 1950s. The Chinese military, which supported the North Koreans, would ask American POWs, “Is the United States perfect?” The U.S. soldiers, of course, would respond, “Nobody’s perfect.” So the Chinese military would ask, “Would you mind writing this down? That is, if you believe it. We’ll give you a couple of cartons of cigarettes for your effort.” So, many POWs then wrote down, “U.S. not perfect.”
A couple of weeks later, the Chinese interrogator would ask the POWs, “What are some ways that the United States is not perfect?” The Chinese would essentially ask the Americans to back up their statements. Many of the POWs would write down some ways that the United States was not perfect, and get another carton of cigarettes for their efforts.
This would go on for several months, in increasing levels of detail. The Chinese military would then publish these long diatribes against the United States by U.S. soldiers, written in the soldiers’ own handwriting. Very few of the American POWs would go back on what they had said, since the comments were in their own handwriting. In fact, they vigorously defended what they had written. The U.S. soldiers, by definition, had been brainwashed. It was a significant psychological blow to U.S. efforts to keep up morale.
Here is an example closer to home: A Penn Law student, Neil Sethi, now the general counsel of a big real estate firm, went out with some friends to Don Shula’s sports bar, a franchise started by the former Miami Dolphins football coach, for drinks and dinner. He ordered a beer, which did not arrive until half an hour after dinner was served. “In the spirit of the class, and almost without thinking,” he said, “I asked if drinks are supposed to come before dinner.” The waitress apologized profusely, Neil said; she added that there had been a mix-up with another table. He asked if any of this was his fault. She said no. Neil then told her to take back the beer. The waitress said she could not do that, since she had already opened the beer and put the charge into the computer.
“I asked if it was the restaurant’s policy to penalize customers for its mistakes,” Neil said. “Of course not,” she said. Neil then asked if a drink charge, or any charge for that matter, had ever been taken off a bill after the charge had been put into the restaurant’s computer. The waitress answered yes. So Neil wanted to know, if this was the restaurant’s mistake, and charges had been taken off the bill before, why wasn’t the charge being taken off the bill now? The waitress took the charge off the bill.
After the waitress walked away, a friend of Neil’s expressed astonishment that the waitress had taken the charge off the bill. “I know this restaurant chain,” Neil’s friend said. “That money is coming out of that waitress’s meager salary.” Rather than appear like a fool, the waitress had essentially agreed to deprive her family, maybe of a food purchase.
“The news that the cost of my beer was going to come out of her check stunned me,” Neil wrote. “I began to genuinely realize the power of these tools. I realized that with this power I have learned came a responsibility to use it wisely.” He paid for the beer and thanked her for the lesson in human relations. He said this lesson would greatly influence his career.
Knowing this, you have to decide what is comfortable for you in negotiating with others. I might try for some things that you would never attempt, thinking it unseemly. Though I might ultimately get more than you, you may decide it would not have been worth it for you to feel bad.
One woman in my class was sure that using the other party’s standards could not possibly work. So I told her to pick any situation and try it out. She had bought a lot of clothes from Eddie Bauer, a well-known clothing retailer. Eddie Bauer had a written lifetime money-back guarantee for its clothes.
So this woman went back to her apartment, took all the clothes from her closet that she had bought from Eddie Bauer over the previous five years, went to the local Eddie Bauer store, slapped the clothes on the counter, and said, “I don’t like these clothes anymore. I want my money back.” Store personnel gave her all her money back, in full, in cash, on the spot.
“I was never so embarrassed in my whole life,” the student reported the following week.
This was going too far for the student; she found out what her limits were. I advised her to avoid situations that made her uncomfortable. “But don’t tell me these tools don’t work,” I said.
Let’s look more deeply into the mechanisms that cause this strategy to be so effective. A few years ago I was in Taiwan for a week on business. At the end of the week, the hotel where I stayed charged me $150 in access fees for 150 credit card phone calls—$1 per call. I was prepared to pay the tolls. But there was no notice in the room about access charges. So I found the manager, the decision-maker, and started to negotiate with her.
“Is it your policy to charge customers for things you have not first notified them about?” I said.
By asking that question, I gave her the choice that I always give people when I use standards. That is, “Be extreme or come to me.” What was she going to say, “Sure, we break the law, no problem”? Not likely. By law, you must give notice before charging people for anything.
So she said, “Of course not.”
“Well,” I said, asking a second question, “there was no notice in the room about access fees for credit card calls, was there?” “Well, no,” she said, “but other hotels charge you.” “Of course they do,” I said, “but they notify in advance, don’t they?” She thought for a moment. “You have a point, Mr. Diamond,” she said. “I’ll tell you what I’ll do. Why don’t we split the difference, and you pay $75.” To which I responded: “Please help me out here, I’m confused. If I’m right about this, I don’t owe you anything. If I’m wrong about this I owe you $150. Where does $75 come from?” Compromise is often a lazy, ineffective way to negotiate. At the very end, after every other tool is used and there is only a short distance to bridge, it might be okay. But standards are much more effective. “You’re right,” the manager said. “We’ll take the charge off your bill.” You might find this a bit harsh. Clearly, using the right tone in such a negotiation is important. You should say all this in a calm, very sweet, and reasonable tone. The key is to give them the choice as to whether to be extreme or meet your goals. Over the years, my students have gotten millions of dollars back using such methods. The real question is whether the money should be in your pocket or theirs—particularly when they have been unfair.
What if the other person doesn’t want to answer your standards question? Ask them if there is something wrong with the question. That makes answering questions a standards issue.
One caution: you will frequently fail if you ask for exceptions with a lot of people around. Why? Because that makes it a bigger decision for the other party. If others overhear, then they will also ask for exceptions.
BEING INCREMENTAL
Underpinning the use of standards, and indeed all of Getting More’s advice, is the notion of being incremental. Break up a negotiation into multiple steps. Most people who are less experienced at negotiation ask others to take too big a step at once. They ask other people to make a big jump from where they are to where you want them to go. For example, “My computer is broken, give me a new one.” Asking the other person to make this big a jump makes it easy for the other person to say no. Big steps seem more risky, too different from the current status.
So you should divide the negotiation into smaller steps. You get anchoring and buy-in at each step. The distance traveled between each anchor is small. You can bring people great distances through incremental steps. You lead them from the familiar to the unfamiliar, one step at a time.
Essentially, you are building the foundation in each case to persuade people to go to the next step. If the other person asks where you are headed, tell them that you are trying to determine their standards, to find out what is possible in this situation. If they ask you more questions, you disclose the information that brings you closer to your goals. “What is possible here?” is thus better than “I want you to give me twenty percent off,” a much bigger increment.
You need to start far back enough that they can’t say no to a point you’ve raised without their feeling foolish. Start with the pictures in their heads. That’s what a standard is—a picture in their heads. Most people don’t go back far enough in a negotiation. You need to start with what is familiar to them, and to proceed incrementally from there.
What do I mean by going far back enough? Ask, for example, “Do you want to reach an agreement?” “Do you want to make a profit?” “Do you want to make your customers happy?” It provides an anchor for the negotiation. If they say at the beginning that they want to reach an agreement, but later start making outrageous demands, you can ask the other party how this dovetails with their indication that they wanted to reach an agreement.
In a negotiation you should lead people from the familiar to the unfamiliar, step-by-step. The more difficult the situation, the smaller the steps you have to take, and the more steps you’ll need.
The pictures in their heads should be simple, something to which they can’t say no and that you can accept.
Here is an example of being incremental, starting from what is familiar. A student of mine, Rocky Motwani, went to pay a traffic ticket at the Department of Motor Vehicles in West Philadelphia. There, in huge type, he saw a sign that said ABSOLUTELY NO PERSONAL CHECKS ACCEPTED. Rocky only had a personal check, so he decided to see if he could negotiate this.
He searched around for a standard. On the back of his ticket was an address to which one could mail a personal check. There was something familiar about the address.
Rocky approached the window. “It says on the back of my ticket that I can mail a personal check to the address listed here. Is that right?” Rocky said to the clerk. “Yes,” the clerk replied.
“Where exactly is this address?” Rocky asked. “It’s this building,” said the clerk.
Rocky paused for a moment. “And where exactly in this building do the checks come to that are mailed in?” Rocky asked. “Why, that desk over there,” said the clerk, gesturing to a desk about six feet away.
“Really,” said Rocky contemplatively. “Could I ask you a question? Is there something special about that six feet? Six feet away, a personal check is okay. Six feet closer, a personal check is not okay … What if I take my check and put it in an envelope and waft it over you and it lands on the desk over there? Can I pay by check then? I’ll even put a stamp on it.” Did Rocky pay by check that day? He did. And 3,000 people before him did not. And probably 3,000 people after him did not. Now, you may not prefer the bit of sarcasm Rocky displayed. You might instead have asked if there were ever any exceptions to the rule of no personal checks. The point is, Rocky pointed out the apparent inconsistencies in the DMV’s rules, and in doing so met his goals. If he had tried to negotiate all at once (“Why can’t I pay in person by personal check if I can mail one in?”), it would have likely been too big a jump for the clerk to make. The clerk needed to see every step of the thought process.
Rocky has since become a managing director at JPMorgan Chase Bank, running a $200 million business. Today, he says, “I use the negotiation tools actively, and daily.” Particularly being incremental.
Here is an example from a business situation. Murray Helmsley, a manager for BASF, was told by a large customer that BASF needed to put bar codes on all of its packages. The customer said it would withhold $450 per package if BASF did not do this to defray the customer’s manual sorting costs. But BASF’s home office told Murray they would not do this for just one customer. What was Murray to do?
“I ignored the threat, and looked at more incremental options,” Murray said. He persuaded BASF to do a one-month trial using customer-provided labels. BASF’s logistics and marketing people agreed to meet and coordinate with the customer. The test worked.
Attorneys find that being incremental is similar to cross-examination. You lead people step-by-step to where you want them to go. The steps lead toward a goal. The difference in negotiating is that the process is not intended to trap people but to have them understand precisely where the other party is coming from.
One of the most famous uses of being incremental in a hard-bargainer situation is a scene in the 1970 movie Five Easy Pieces. The Jack Nicholson character asks for a side order of toast in a diner. The waitress says they don’t serve toast. So he orders a chicken salad sandwich on toast. Then he tells the waitress successively to hold the mayonnaise, the butter, the lettuce, and the chicken. His tone is hostile and he gets very angry, but he doesn’t have to. He shows the diner’s standard to be unreasonable and that they could meet his goals. (In this case, though, he causes a scene and doesn’t get the toast.) Those in my class learn from the mistakes of others. Kris Davenport, one of my Columbia Business School students, ordered a Virgin Mary (Bloody Mary without vodka) at a restaurant. She was told this could not be done. “Do you have tomato juice?” she calmly asked. “Yes,” the waitress said. This continued with Worcestershire sauce, Tabasco sauce, and ice. She got the drink.
I know, some of you may think they will spoil your food. Not if your tone is nice. Not if you ask if anyone is going to do that. I once said that to a restaurant and they were absolutely shocked I would think of that. You might also say that a nice tip is coming if they meet your needs.
Even if they won’t give you much at first, take what you can get and come back another day. Remember, “Every ceiling is a new floor.” Take the 1 percent cut in your credit card interest this month; renegotiate next month; $50 here and $75 there is a lot of cash at year’s end.
FRAMING
The key to standards—indeed, to all successful negotiation—is framing. I’ve referred to it earlier in the book. But nowhere is it more important than with standards. Framing means packaging information or presenting it using specific words and phrases that will be persuasive to the other party.
Negotiation is very sensitive to the exact words used. The idea is to give people a vision of what the key issues are. Barack Obama used “Change.” The late Johnnie Cochran, in the O. J. Simpson murder trial, said to the jury about the glove, “If it doesn’t fit, you must acquit.” Coca-Cola made billions of dollars on “the pause that refreshes.” Here are a few other examples of how you might frame an issue: If a restaurant is late with your reservation, ask, “Does this restaurant stand by its word?” Or, to any service provider, “Is it your goal to make customers happy?” Figuring out how to frame things comes from asking yourself the question, “What is really going on here?” Great negotiators have a firm grasp of the obvious.
A Wharton law student, Lina Chou, received an invitation for an American Express card. The bonus for signing up was 5,000 free miles on a participating airline, worth up to about $250 or so. She called American Express and was told that she didn’t qualify for the offer because she already had an Amex card. The offer was valid only for new members, she was told.
Lina thought about this. Then she called back, asked for a supervisor, and told her the issue. She then said, “Could you tell me who I should talk to about American Express’s decision to change its worldwide advertising and positioning for the entire company?” “What do you mean?” the supervisor said.
“Well,” Lina said, “it used to be that American Express had this slogan, ‘Membership has its privileges.’ But now I find that nonmembers have more privileges than members. So you must have changed your slogan to ‘American Express: Nonmembership has its privileges.’ Who do I talk to about that?” The supervisor gave the miles on the spot to Lina, now a finance analyst in New York. Can you imagine this situation getting out to blogs? Framing the issue, and using standards in the presence of third parties (or implied third parties), are very effective. Here, Lina’s framing showed that Amex was implying that new customers were more valuable than existing customers. Put in these terms, Amex preferred to provide the miles.
Studies have shown that one person will be much more persuasive than another with the exact same facts because of framing. The more successful negotiator packages the information in a way that creates a different picture in the other person’s head. One study often cited has to do with survival rates for surgery. Some patients are told that an elective surgery has a 90 percent survival rate. Others are told that the surgery carries a 10 percent risk of dying. Even though the information is exactly the same, many more people elected the surgery when the choice was presented as a 90 percent survival rate.
A student bought a computer from CompUSA. After a month, the computer broke. He called the salesman, who told the student to send the computer back to the manufacturer because it was still under warranty. The student didn’t want to do that—it would take time and he needed a computer for school.
So the student called the store back and asked for the manager. The student said to the manager, “Is it your policy to stand behind your local customers? Or do you send them away to someone else at the first sign of problems?” “Of course we stand behind our products!” said the manager.
“So why are you sending me to the manufacturer when I need a computer for school today?” the student asked. “That doesn’t sound like you are standing behind your products, does it?” The student got a loaner computer. In other cases, other students got new, replacement computers. Most people would have just complained that “the computer is broken,” or asked, “Why should I have to go to all this trouble to get it fixed?” And the store manager wouldn’t have been swayed. Instead the student framed it in terms of the store’s own customer service standards, and achieved his goals.
You may say, “This isn’t rational.” Most important negotiations are not about rationality. They are about people’s feelings and perceptions. And that is why framing, the way information is presented, is so important. We can use framing to make the world more fair.
PNC Bank in Philadelphia made a mistake on the account of Shehnaz Gill, but the student was charged a fee for the overdraft anyway. He asked the bank manager, “Should PNC customers pay for the bank’s mistakes?” The manager clearly didn’t have a good answer to that and didn’t know what to do. It was hard for him to make such an admission.
So Shehnaz, now a strategy manager at Coca-Cola, applied a second PNC Bank standard: the bank’s widely advertised commitment “to create solutions” for customers. How could the bank manager create a solution here? he asked. Shehnaz got the refund.
Standards can be used not only with hard bargainers, but also in all sorts of relationships. The key is to do it in such a way that you preserve the relationship. Remember, you are on the other person’s side; you are just helping them to see the issue in a different way.
Tahir Qazi had a two-and-a-half-year-old daughter, Nadia, who was very unhappy being placed in her high chair for dinner. She wanted to sit at the table with the rest of the family. But instead of telling Nadia what to do or making something up, her father went around the dinner table, chair by chair, and asked Nadia: “Who sits in this chair?” This was a fun game for Nadia, one that gave her power to decide where everyone would sit. She played enthusiastically. Soon all the chairs were taken.
Tahir, now a Comcast vice president, didn’t then say to Nadia that there was no place at the table for her. Instead he asked her what to do. Nadia realized that if she sat in one of the chairs, someone would have to be left out who usually sat at the table. And she realized that she was the only one who could fit in the high chair.
Now clearly, an older child might say, “Get another chair.” Or be more difficult. For Nadia, in this situation, this was the perfect set of tools. It gave her power, decision-making authority, and an incremental process that helped her see she was the only one who could fit in the high chair.
You don’t have to accept the other person’s standards and framing. A big part of framing is “reframing.” You start with how they phrase something, and you find a different way to interpret it, so that they get insight—and hopefully will meet your goals.
Framing will often change the balance of power in a negotiation, no matter how big or powerful the other party. As noted earlier, it should be used carefully and in a positive way. A woman in my MBA class at Wharton was offered a job at McKinsey, one of the world’s leading consulting firms. She thought she deserved an extra $30,000 signing bonus because of her years of experience in the sector for which she was hired—media and entertainment. Her boss-to-be thought she deserved the bonus, too. But he told her he could not offer it because McKinsey’s firm-wide policy was to treat all incoming MBA graduates the same.
So the student thought about how to reframe McKinsey’s standards to meet her goal: get an extra $30,000 soon. She asked her future boss when the soonest was that McKinsey could pay a bonus to a new hire. “Three months,” the boss replied. “So why don’t you just pay me the $30,000 three months after I start?” she asked. “Sure,” the boss said.
That negotiation took less time than it has taken you to read this account of it.
It is much more persuasive to let others make the decision, instead of telling them what the decision should be. You want to lead them to where you want them to go, through framing and by being incremental. For parents, as I will show later in the book, these tools work particularly well with children.
John Roche’s wife, Rosemarie, wanted to get rid of their dog, a large Dalmatian. “She hates the dog,” John said. For one thing, the dog, Houdini, kept going through the family’s invisible fence, setting off the alarm, and running all over the neighborhood. Neighbors complained.
“I gave her the opportunity to vent,” said John, CFO of a real estate investment trust in New York. “Then I asked if the dog provides security and companionship to our kids.” “Yes,” she said, now a little more willing to think about the benefits of the dog. Then he said, “If we get rid of the dog, what do we tell the kids? That we got rid of the dog because he was an inconvenience, that we couldn’t be bothered?” There is an old proverb: Don’t use a sledgehammer to kill a mosquito. The dog problem wasn’t actually a big problem. In fact, it wasn’t even a dog problem—it was a fence problem. The solution: adjust the fencing system to keep the dog from setting off the alarm and running all over the neighborhood. Drill down and find the smallest solution necessary to fix the real problem.
You can use framing and being incremental to meet your goals in work relationships, as well. Peter Tauckus, a debt instrument trader on Wall Street, returned from vacation to find his seat taken. “Location is important on the trading floor,” he said. His boss had given Peter’s seat to a trader who was hired back. One of the conditions of acceptance was that the trader sit at the trading desk, where Peter’s seat was empty. Most people would have given up at that point. But Peter decided to negotiate it.
“I asked my boss if Tom was going to trade par debt or distressed debt,” Peter said. “Distressed debt,” his boss replied. “So why isn’t he sitting with the other distressed-debt traders?” Peter asked. Peter then asked if all the traders should sit at the trading desk. His boss answered yes. Then Peter asked if there were any salesmen sitting at the trading desk. There were. So Peter asked if the salesmen had to sit at the trading desk.
Peter summed all of this up, and then added that it had taken him a long time to get his seat. Bottom line—he got his seat back.
Framing and being incremental are two of the hardest things for people to learn. Most people want to rush ahead, and find it hard to break things up into smaller steps. Also, it takes time to get just the right framing; many people don’t have the patience. But great framing can immediately conclude a negotiation in your favor.
Kevin Sherlock, a managing director at Deutsche Bank, framed the situation for a customer demanding a lot of extra work without paying for it: “Should we work for free?” Said with a collaborative tone, this is very good reality-testing for a customer.
SETTING STANDARDS
You should always try to set the standards before the negotiation starts. People see the value of a general rule at the start of the process. If you don’t do that and try to set standards later when it clearly benefits you, others will think you are being manipulative and taking advantage of the situation.
A good standard to set at the start of a business meeting might be: any item we can’t solve in fifteen minutes, we go on to the next item. So at three o’clock in the morning, instead of being on item 4, we are on item 30, with four to go. Then we go back and solve the hard ones. This is called a “process” standard, or a standard to govern the process that people will use to negotiate.
An agenda is a process standard. Most people don’t think agendas are a big deal, so they don’t set one. They have an idea of where they want to go, and that’s good enough. I disagree—it’s not good enough.
I can’t imagine having a meeting without an agenda. Even if you know what you want to talk about, an agenda sets a standard for proceeding. If you get lost, it helps you get back on track. You need to make sure that everyone agrees on the agenda. That way, if someone interrupts and tries to go off on a tangent, you can note that everyone agreed to the agenda. You can write the new subject on the board for all to see, under “other business.” Even for a simple meeting, you need an agenda. If you have set an agenda before the meeting, check it again at the start of the meeting in case things have changed. We all know how easy it is for meetings to go off track. Not having an agreed-upon agenda at the start is like getting in the car without directions to your destination.
In negotiating, start with the easy things. It gives both parties a sense of accomplishment. An easy thing is “When is the next meeting?” Even if the first five items are merely logistical, they are not trivial. Accomplishing anything makes the parties feel much better about the meeting and become much more collaborative.
At the final negotiation for a $300 million merger between two high-technology companies, progress was glacially slow, with lots of bickering. I realized that the committee was too large to reach an agreement anytime soon, and I caught the eye of someone on the other side, Rick Seifert.
“Hey Rick, want to have a cup of coffee in the next room?” I said. Maybe Rick and I could start to work something out.
The reaction of Rick’s colleagues was swift. “I don’t know about that!” said the CEO of Rick’s company. They were thinking I was going to divide and conquer, that Rick would give something away or that I would somehow take advantage of Rick. This was, of course, ridiculous.
So I said, “Oh! I see! You think I’m going to brainwash Rick in fifteen minutes. Is that right, Rick? Am I going to be able to brainwash you in fifteen minutes?” Well, his colleagues felt foolish. They realized that they had shown no confidence in Rick, a seasoned negotiator, and that their fears were unfounded. I thought of the pictures in their heads and I realized they were probably wondering why I wanted to meet with Rick privately.
So I added, “I’ll tell you what. Rick and I are going to have coffee, I’ll bet we both need some. Why don’t you guys give Rick and me something to work on while we’re having coffee? We’ll try to come back with a solution.” This seemed reasonable to everyone. So they gave us a problem to work on. Rick and I went into the next room, commiserated on how slow this was going, worked on our task, found a solution, and then came back to the negotiation. Our collaborative answer changed the whole tenor of the negotiation, and the merger negotiation was successful.
What if you don’t know what the other party’s standards are? What should you do? Ask. In your job, ask for the criteria they use to decide raises and bonuses. If they won’t tell you, mention, nicely, that you can’t meet their needs unless you know exactly what they want from you. Get them to be as specific as possible—both about their needs and the amount of the bonus. Then, when you meet the standards, it will be much easier for you to make the case for a raise. Find out the consumer price index and see if you are being paid more or less in real dollars this year versus last year. If less, ask if you aren’t at least as valuable this year as last. Or find some measurement of the company’s success to use.
There are situations where this won’t work. As I said, no tool is perfect. But it works more often than if you don’t try. And even a small increase in your success rate will have a major positive impact on your life.
Asking the other party for their standards often values them, particularly if you do it respectfully. I was late on paying a big bill to American Express. Amex refused to give me the attached airline miles as a result. I was about to get angry at the Amex customer service rep, since I was a longtime Amex customer. Then I stopped myself and thought about her day.
“I’ll bet people scream at you all day long,” I said to her on the phone. “They do,” she said.
“I’ll bet a lot of people threaten to cancel their card when they don’t get their miles,” I said. “Absolutely,” she said.
“What do you do in such a case?” I said. “Well,” she said, “I just transfer them to the card cancellation department. I don’t have to take that garbage.”
“Do you ever restore people’s miles when they have been late paying their bill?” I asked. “Sure,” she said. “When?” I asked.
She said, “When they apologize, when they thank me, when they promise never to do it again, and when they are nice to me.”
I said, “You know, I really apologize for being late on my account. I’d really thank you if you could restore the miles for me. I promise never to do it again. And I think you are a really nice person.” She laughed and said, “The miles are already back in your account.” It’s something you will get better at with practice.
Control the criteria by which decisions are made. It used to be that female executives and managers bridled when their male counterparts asked that the women take the chalk and write the meeting points on the blackboard. My advice is, you should always take the chalk. That way you control the process.
I once had a negotiation in Atlanta with CEO Buddy Wray and CFO Wayne Britt of Tyson Foods, the world’s largest producer of chicken, beef, and pork. I was representing a Croatian client that owed Tyson more than $75 million for chickens that my client had distributed in Russia. I was trying to reduce the size of the debt and negotiate a plan that would enable the client to remain in business.
I was much younger than they were, and knew how to type. So I offered to take the meeting minutes. The Tyson CEO sort of waved me off with some condescension and said fine, I should take the minutes.
So I wrote down the meeting notes exactly as I wanted, organized the main points exactly as I wanted, typed up the meeting memo exactly as I wanted, typed up the agenda for the next meeting exactly as I wanted, and sent it off to the Tyson executives.
At the next meeting we had, this silver-haired Tyson CEO walked in, holding a laptop computer awkwardly as if he never held one before. He gestured pointedly at me and exclaimed, “I’ll take the minutes!” No fool he.
No matter what your level in an organization, just by asking some well-placed questions, you can soon control the meeting. “What are our goals here?” you might say in a nonthreatening way. “What’s the problem?” you might say tactfully. You might offer to write these up on the board, asking permission to do so. Soon you will control the meeting.
NAMING BAD BEHAVIOR
It is just one step from naming their standards to naming bad behavior. A person who behaves badly implicitly violates his or her own standards by acting counter to the practices of the society, company, group, or other organization to which they belong.
“Society” in this case includes third parties to whom the other party appears beholden. And third parties are key, whether present or absent. A person who appears unreasonable before important third parties would lose credibility and could be criticized or even fired.
Often, when people behave badly to you, you can get a “chit,” or an I.O.U., in return for their bad behavior. An apology is a chit. If your car gets delivered back late from the shop, you might get a free oil change if you note the bad behavior. Some of the examples above involve implied third parties, as in the case of the immigration official in Tortola (what if the prime minister found out she violated his pledge?).
Naming bad behavior is particularly useful for women executives in male-dominated corporate suites. There are a lot of different ways to do it—directly, with humor, etc. Almost all are effective. One female vice president was a particularly collaborative person. This was ordinarily wonderful, but she was in a shark’s den.
One day she was talking to the CEO of the company with another vice president, a man. The other vice president repeatedly interrupted her. Then, in the middle of a sentence as she was talking, the other VP walked away, embarrassing her. She thought that this was the time to make a stand. After she finished talking to the CEO, she caught up to the male vice president.
“Let me ask you a question,” she said. “Yes?” he said.
“What were you thinking about when you walked away in the middle of a sentence when I was talking to the CEO, embarrassing me?” she said. “What were your goals? What kind of relationship did you want to have with me? Would you have done it if I were a man?” She said that he apologized to her for two days.
Great negotiators have a firm grasp of the obvious, and they say it. So you need to be direct about naming bad behavior. “Is it necessary for you to be shouting at me?” you might ask. Or “I promise to try hard to never interrupt you. May I have the same consideration?” Remember, these are tools you can use often with hard bargainers who don’t seem to get the concept of relationships and are trying to undermine you.
In the movie Get Shorty, the John Travolta character is giving negotiation advice to the character played by Gene Hackman. Travolta tells Hackman that when he negotiates, he should open the blinds to make sure that the other party sits with the sun in his eyes and therefore gets distracted. Now, if that happened to you, wouldn’t you want to call the other party on it? “Why am I sitting here with the sun in my eyes?” Or you might say, “This sun is distracting. Why don’t we close the blinds so I can focus more on our conversation and on what you are saying.” You need tools to deal with hard bargainers. Not all negotiators are nice. Some people advise you to be nice in a negotiation, that it contains a lot of power. Well, that depends on the situation. If you are in the water with sharks, you need shark repellent. I’d rather be nice, but I am not going to leave myself—or you—unprotected if the situation does not call for niceness.
Here is the key to naming bad behavior—and this is one of the most powerful tools of all: in naming bad behavior, you must NEVER make yourself the issue. If you do, you lose the chit, because then you are also unreasonable. Attorneys make this mistake often. They may say, “How dare you call me a jerk, you jerk!” In fact, the meaner and more difficult they become, the calmer and quieter you must become. This is one of the few tools against which there is no defense. For example, say in a very sweet voice, “Why are you swearing at me? I would never curse at you. Why, we respect you.” You want to put all the focus on them. They will drive themselves off a cliff, appearing increasingly unreasonable.
The best modern practitioner of this tool was Mahatma Gandhi. He took the jewel in the crown—India—from the British Empire without ever raising his voice or ever raising a weapon. The more vicious the British became, the more passive he became. Finally, Britain became so extreme they could not withstand the onslaught of world opinion, and they gave up India.
The Reverend Martin Luther King Jr., with his strategy of nonviolence, produced the same reaction. White supremacists finally became so extreme that they lost the support of the political system and most of the rest of the nation.
Naming bad behavior without making yourself the issue is so powerful because it turns the other party’s entire being against them—all the focus is on them. In the second debate of the 2008 U.S. presidential election, every time John McCain insulted Barack Obama, Obama was respectful. When McCain refused to shake Obama’s hand after the debate, Obama was gracious. All the negative focus was on McCain. As noted, McCain probably lost the election then and there.
In corporate or relationship settings, you have to be careful about the way you name bad behavior. Tact is often required. One example is someone trying to take credit for your idea. You bring up a great idea in a meeting, only to have someone paraphrase it as their own later in the meeting. This is a perfect occasion to name bad behavior—without making yourself the issue.
First, compliment them. “That’s excellent!” you should say, without sarcasm. “When I brought this idea up a few minutes ago, I was hoping someone else would endorse it. Glad to see we agree!” Or, if you want to be even tougher (without making yourself the issue), you might say something like, “Terrific! When I brought up the idea a few minutes ago, I didn’t know anyone else was working on it.” Then review what your group has done with the idea and ask sweetly, “So what have you all been doing with the idea?” They may waffle their way out of it that time. But they will never do it again.
Clearly, practice makes all of this better. Practice framing questions in which standards are embedded. You will get better and better at it. Ask, for example, “What’s fair here?” “How do we decide?” “Should I pay for your mistakes?” “Is it your company’s goal to make customers happy?” Not getting upset when the other person violates their own standards is key. It takes a change in attitude to get it right. For example, every time someone tries to cheat me, I tell my team not to get upset. “Look at it this way,” I say. “We just made money!” We name the bad behavior and get a chit. I am happy when others try to cheat. Now, I have them pegged as cheaters. And I can use it forever.
When people don’t return phone calls or emails, try not to get upset. Just keep a list of the dates and times of your calls. When you get enough of a record, email them, saying, “Gee, we called you fourteen times in the past two weeks; we were hoping to reach you. Is there something else we can do?” Now you’ve got a record you can use with third parties. But you probably won’t use it often; they almost always call back.
Moira McCullough got to her beach house one rainy summer weekend only to find the landlord there with some of his friends. “The landlord had assumed that we wouldn’t be out for the weekend,” she said.
Many people would be angry at the landlord. This would have gotten her nowhere. The landlord would have become defensive and Moira would have had to sue the landlord to enforce the lease. Instead, she was cool as a cucumber. “I asked him if we had paid for use of the house for the entire summer, seven days a week, for sixteen weeks,” she said.
He admitted he had acted improperly. Still matter-of-fact, Moira asked him for concessions. She got two more weeks in September at no charge. “People too often lose focus on their goals,” said Moira, later a telecommunications manager in London and New York and now a stay-at-home mom for her kids, ages seven, ten, and eleven.
Train yourself to do this. You will get more this way. You will meet your goals more often.
Ben Young went to an electronics store in Manhattan to buy an extended-life battery for his camcorder. “$200,” the salesman quoted him as a price. It was four times the normal price. Ben was ecstatic. “So why is the price four times normal?” Ben said sweetly. “$100,” the salesman said. “Why did you just drop the price so much?” Ben said. “You must really be trying to gouge me.” The price then went to $80, to $65, and then to $55, “the best price I can offer,” the salesman said. At this point, Ben, now head of a real estate hedge fund, asked for the manager. “Is it your usual policy to quote four times the price of a product to a customer?” Ben said. The manager said no, criticized the salesman, sold the product for $50, and threw in a free carrying case, “for my hassles.” What a rush! Hard bargainers are fun!
Ka-ming Lim couldn’t get repairs done in his apartment by the maintenance staff. But the staff did respond to angry complaints to the manager’s office. So he said to the manager, “Do you think it’s fair for residents who make the least noise to receive attention last?” Ka-ming, now director of a Singapore bank, essentially named bad behavior with good framing. The maintenance people showed up within four hours.
When you do something wrong, do others try to exact too big a penalty from you? You can use framing here, too. Essentially, they have behaved badly in “overcharging” you for your bad behavior. In such situations, you can ask, “So how much do you want to hurt me for this?” It gives people a sense of perspective.
Terry Jones bought the wrong ticket for his New Jersey Transit commuter train. The ticket collector started to berate him and demanded that Terry buy an expensive one-way ticket to New York and pay a surcharge. “So you want to give me the death penalty?” Terry said jokingly. “The conductor smiled and said he would come back. He never came back.” James Ciarletta’s fiancée received an unqualified coupon from Cohen’s Optical for a new pair of glasses for $34. But the store’s salesclerk told her they were only for a limited number of (cheap) frames. Most people would just give up, not wanting to make a scene. But James decided he would calmly use standards and hold the store to its promise.
James’s fiancée picked out a pair of frames for $174.54. James introduced himself to the owner, who confirmed it was a franchise and she had complete authority for items in the store. She also confirmed that customer satisfaction was very important at Cohen’s, as its ads say.
“I asked if it was Cohen’s policy to honor its published coupons,” James said. “She said it was.” Then she declined to honor the coupon. James asked again if Cohen stood behind its published advertising.
“She began blaming the advertising agency for making a mistake,” James said. “She started to get very heated about it. I kept my cool. I kept bringing her back to the same standards issues: her authority, customer satisfaction, honoring its policies. I asked if money is more important than customer satisfaction and honoring its policies.” Finally she started screaming at James and his fiancée, “Okay, that’s right, making money is most important to me!” James took a step back and waited. Suddenly people in the crowded store stopped and looked at the owner, surprised looks on their faces. A few seconds, seeming like an eternity, passed. James was already thinking about the letter he would write to corporate headquarters about this franchisee. He knew she knew that.
“I calmly started to restate her words to the rest of the now-quiet store,” James said. “The owner stopped me, apologized, and said I was right. She said customers are in fact more important and the store would stand behind its advertising.” He asked his fiancée to give the owner the chosen frames and the coupon. “They gave us the completed glasses in thirty minutes,” he said.
This goes farther than a lot of people would go to achieve fairness. James did report that he felt his lip quivering during this exchange—something I said would disappear with practice. But James stayed calm throughout; it was the owner who got upset. Would some people think the store shouldn’t be penalized for the mistake of its ad agency? Maybe.
But I included this story to show you, again, how to go about doing this. Notice that James was incremental in his approach, and never got rattled. You can apply it to things large and small in life. You only have to decide that you will hold people to their promises.
Now let’s look at some significant business negotiations and see how these tools apply. Some years ago, Hewlett-Packard was involved in a major project to upgrade the computer facilities for Telecom Egypt in Cairo. Another contractor was rude, sexist, racist, and confrontational, according to HP; the American staffers there were up in arms.
HP sent a couple of people to my office in Philadelphia for a few hours to talk with me about what to do using negotiation tools. For various business reasons, HP did not want to approach Telecom Egypt directly with the anecdotal evidence they had.
I asked the people from HP if there was any U.S. aid in the deal. There was, a small amount of money from the U.S. Agency for International Development (USAID). A company is not allowed to participate in a project where U.S. laws are violated. The actions by the contractor clearly violated U.S. laws. And the most interested party in protecting U.S. laws would be the U.S. government, I suggested.
So I advised the HP people to issue each of their employees notepads and pens. I suggested that for the next month, the HP employees should simply write down in their notebooks everything this guy said and did—not to argue with him, protest, get angry, etc.
At the end of the month, I said, HP should collect the notebooks, put a rubber band around them, write a short summary, send them off to USAID in Washington, and ask, “What do you think?” Within a short time, the contractor was gone. No muss, no fuss, no problem. This is a great example of using standards to deal with bad behavior.
One of the most difficult hard-bargainer situations I’ve been in occurred a few years ago during a major financing for a company in Ukraine. It was a $107.5 million Eurobond issue for Ukraine’s largest company, Yuzhny Machine-Building Plant, or Yuzhmash. Yuzhmash built most of the former Soviet Union’s land-based intercontinental ballistic missiles (ICBMs) for nuclear warheads. After the fall of the Soviet Union and Ukraine’s independence, Yuzhmash sent its nuclear warheads to Moscow as part of a disarmament effort brokered by the Clinton administration, to limit the number of countries with nuclear weapons.
This good will by Ukraine got some Western business. One was the production of rockets by Yuzhmash for a commercial joint venture with Boeing to launch communications satellites.
Yuzhmash needed working capital to build the rockets. The bond would be the largest foreign-sourced commercial financing in the history of Ukraine. I was Yuzhmash’s counsel, charged with putting the deal together. Eventually, I persuaded JPMorgan in London to raise the money.
The project began in 1998, when we received from the Ukraine Ministry of Finance an unconditional, irrevocable Ukraine government guarantee that I wrote for the $107.5 million to be borrowed by Yuzhmash. The guarantee was very tough; I thought financiers would need such a guarantee because Yuzhmash had no history of Western borrowing and would be considered a big credit risk. In fact, the World Bank’s European arm, the European Bank for Reconstruction and Development (EBRD), turned down the loan twice as too risky.
The Ukraine finance minister, however, was happy to provide the guarantee. It was an excellent political gesture, since the immediate past president of Yuzhmash was Leonid Kuchma, then the president of Ukraine. Also, it didn’t cost the Ministry of Finance anything, since the guarantee wasn’t worth the paper it was printed on: Ukraine had no investment-grade international debt rating.
I held on to this guarantee for five years, until March 2003, when, lo and behold, Ukraine got an international investment-grade debt rating. We went back to the Ministry of Finance and said, essentially, “Hi! Here we are again! Ready to do the deal!” Both JPMorgan in London and its law firm, Linklaters, wanted the guarantee reendorsed because five years had passed.
The Minister of Finance essentially told us to get lost. President Kuchma was on his way out, the ministry was borrowing billions of dollars from other governments, and the terms of our guarantee were too draconian. The minister was in the driver’s seat, believing he had all the power. Since they were bringing in all this government money from abroad, they thought they had enough power to challenge President Kuchma’s wishes. Remember what I said earlier about the misuse of power.
We tried being collaborative: This was great for Ukraine; it would establish a foreign-sourced commercial lending market and open the way for all sorts of private economic growth in Ukraine. To no avail. Finally, we had to use standards.
The Yuzhmash officials and I sat with the Minister of Finance and various deputy ministers. We made copies of the guarantee the ministry had signed five years before. I asked the minister, “Does this guarantee say, ‘Irrevocable’?” It did, of course. I then asked, “What does ‘irrevocable’ mean? That you can revoke it later when you feel like it?” Clearly, that wasn’t what irrevocable meant. Everyone got a bit uncomfortable. We were using their own standards against them.
I then said, “Does this guarantee say ‘unconditional’?” Of course it did. “What does ‘unconditional’ mean?” I asked. “That you can set conditions later when you want to?” They grunted. Of course, it didn’t mean that, either.
Then I turned to the last page of the guarantee and asked them to do so, too. “Is this the seal and signature of the Ministry of Finance of Ukraine on this irrevocable, unconditional government guarantee?” I asked. Clearly, it was.
Finally, I said: “So the standard that the Ukraine Ministry of Finance is setting for all those international lenders from whom your government wants to borrow billions of dollars is that the Ukraine Ministry of Finance will break its commitments to foreign lenders when the ministry finds it convenient to do so.” I suggested that this would not likely bring in many lenders.
This was not a happy meeting. One deputy minister got so upset that he pointed out that we, Americans, were in the middle of Ukraine. I asked if he was physically threatening us. His extreme statement just undermined his credibility. The ministry reendorsed the guarantee and we did the deal.
I didn’t just want to leave the relationship with the ministry in shambles—which is where it was at the end of the meeting. So afterward I talked to Yuzhmash, and we decided that the company would invite the minister to come on the road show with us. We were going at least to London, Vienna, and Frankfurt to meet lenders. Yuzhmash told the minister that he could meet new investors to whom he could pitch his own deals, after he verified to them that he had reendorsed the Yuzhmash deal. This was clearly a benefit to him. So the ministry sent another deputy minister with us.
Finally, on the road, I had a couple of meals with the deputy—not alone, but with others. By the end of the week he said hello to me when he passed me in the hallway. It had been very much a hard-bargaining situation. But we met our goals and in the end, I think, did what was best for all parties.
Of course, it is very important in all of this to make sure the other party is actually behaving badly. That means you still first have to go through the process of collecting information. You have to find out what’s really going on.
Bryan Holmes was the brand manager for a major nonprescription medicine. He got a call from his factory manager saying that the quality-control people “had rejected another batch” from Puerto Rico. Bryan said he wanted to see all the facts before making a decision. What are the rejection standards?
Bryan found out that the standard rejection rate for nonprescription drugs was 3 percent. But the Puerto Rico factory was being held to a much stricter, 1 percent rejection rate used for prescription medicines. “This was a mistake,” Bryan said. “One percent is almost impossible to meet” for a nonprescription drug. When the 3 percent rejection rate was restored, the factory did just fine. The wrong standard had been used. It seems obvious when broken down into its elements. But how many people do this?
Shawn Rodriguez was told that “federal regulation” required his lower-interest loans to be paid off first. This turned out to be incorrect. But Shawn’s conversation with the loan rep did not have to be hostile. All Shawn needed to do was to get her name and ask for whatever backup she had. Once he checked it out and found out the claim wasn’t true, he was able to get something for it.
“I didn’t assume a war,” said Shawn, now an associate in the law firm of Gibson, Dunn & Crutcher. “To be contentious would have been counterproductive. I just fixed the problem, got the credit, and met my goals.” WRAP-UP: YOUR COMPETITIVE ATTITUDE
Think about when you played competitive sports: baseball, football, hockey, swimming, etc. When you were in the thick of competition, what were you thinking about? By far the number-one answer in my courses is winning—at least 95 percent of the answers. But it’s the wrong answer. If you think of winning, you’ll lose.
Here is a better question. What were you focused on? The answer should be the ball, the puck, your stroke, your breathing. The minutest details of your craft. If you are a gymnast and don’t do that, you’ll break your arm on the parallel bars.
Competitive negotiation is exactly the same. Don’t get distracted by, well, distractions: winning, losing, what happened yesterday, unfair play, a referee’s call, what might happen tomorrow, the next period, a penalty, the emotion of the moment.
Instead, execute and focus: what are my goals, what standards should I use, what are their needs, can I invoke any common enemies, can I form a vision of a relationship, who is their decision-maker, etc.
Before you negotiate, to be sure, you will strategize and prepare. Then you will focus and execute your strategy, dispassionately. If you see a problem, you’ll take a break, reexamine your strategy, make any needed changes. Then you will go back into the negotiation and execute again. This is a powerful process. It works for the best sports teams and the best negotiators.
It’s also important to consider this method with hard bargainers, because the world is a place where many people cheat. People who cheat are hard bargainers—they make it hard to get fair processes and results. So your attitude in approaching hard bargainers is important. Don’t let them get to you so you become emotional and make a mistake; focus on your goals. By going through the dispassionate process just described, you are much better able to deal with hard bargainers.
In competitive life, there are two kinds of people: those who are qualified, and those who try to steal from those who are qualified. What this really means is that many, if not most, hard bargainers act the way they do because they lack the skill to meet their goals fair and square. So they have to lie, cheat, and steal.
The key is to not get upset or take it personally. Less skilled people have to eat, too. Indeed, in tough economic times, studies show, the number of people who cheat goes up.
So just figure out your goals, use negotiation tools, meet your goals, and move on. They are who they are. Lower your expectations of other parties’ trustworthiness. That way, you will never be disappointed. And you will often be pleasantly surprised.
Again, these tools don’t work all the time with all people. John Layton asked a manager at Neiman Marcus some years ago for a discount on a damaged humidor. The manager said no. “Is it the position of Neiman Marcus to offer damaged merchandise at the same price as undamaged merchandise?” asked John, managing director of an asset management fund.
The manager refused to lower the price and walked away. This happens sometimes. The world has all sorts of people, though it’s unlikely this would happen in today’s economic climate. John could have reported her to Neiman Marcus executives. Others did and got all kinds of goodies. Or he could have posted this on a blog.
Your ability to use standards is often limited only by your creativity. Helene Rutledge, now an innovation director at GlaxoSmithKline, shared the course notes with her husband, Jon. She rightly figured that if two people understand these tools, the way they negotiate with each other will be even better.
One day he said to her, “You don’t love me.” Helene was startled. She wanted to know why he thought that. He told her that she had a really bad cough and refused to go to the doctor. “He told me that since I’m not taking care of myself, I am not living up to the bargain of a long and healthy life together.” He said, “If you die early, you will leave me alone; thus, you don’t love me.” Overdramatic, perhaps, but a lovely way to make a point as an alternative to nagging. Helene went to the doctor.
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