12.20.07

Negotiating Faux Pas - The Soles of the Shoes

Posted in Negotiating at 5:04 am by Administrator

I was watching a rerun of the Daily Show this evening (still suffering from the Writer’s strike) and Jon Stewart itnerviewed Presidential Hopeful and former Secretary of Energy Governor Bill Richardson. Richardson has been through some of the toughest US diplomatic negotiations, especially dealing with the North Koreans.

Richardson told of his meeting with Sadam Hussein to free two US prisoners in Iraq. Richardson started off the meeting in a relaxed manned and crossed his legs, inadvertently showing Sadam the soles of his feet — a sign of insult in the Arab world and much of the Muslim world. Sadam immediately stood up and left the room. The Foreign Minister explained what had happened and Richardson asked for the meeting to continue. Richardson didn’t apologize but he did watch his feet after that. Richardson was successful in securing the release of the US prisoners. 

That incident again highlights the need to be sensitive to cultural taboos. It also highlights the need to be flexible. If you inadvertently make a faux pas, move past it.

Have you any incidents when you inadvertently insulted your host?

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11.16.07

International Negotiating - Step 4 - End Game

Posted in Negotiating at 10:17 pm by Administrator

Concluding a negotiation is the difficult part of the process. The end can be dictated by either achieving consensus on all points in an agenda (say a contract, shipping, pricing, delivery, etc.) or coming up against a certain deadline (legal or end of fiscal year). Sometimes the end can be decided by the fact that there is agreement on some issues and no likelihood of finding common ground on the remaining issue.

In the cross-cultural context there are some unique challenges:

• Face - Can your counterpart take the agreement back to his/her bosses and still retain their respect. If you have negotiated such a tough deal that the negotiator is discredited, then you have won a short term victory and lost a long-term relationship. Good negotiators leave something on the table for the counterpart to take home.
• Language - if the contract is in two languages, you have to have professional translators conform the two documents. Don’t cut corners on this step - words have exact meanings and mistaken usage can cost you money. Even if the contract is in English, make sure you are using it in the same way. Again certain concepts don’t translate easily and terms have different legal connotations from country to country.
• Country of governing law - Ideally, you want to have any legal issues resolved in your local courts or in a country with a developed legal system. Many companies in the technology space specify California law, even when neither has a home in the State.
• Compliance - You have the ability to set up mediation or arbitration for dispute settlement as a way to avoid taking it to the courts. Many companies choose to use the International Chamber of Commerce arbitration system. It is pricey but is considered more fair.
• Enforceability - You have an agreement now - will the other side live up to it? In some cultures, agreements will only be honored if pressure is applied to enforce it. Cheating a foreigner is not considered “wrong” but allowable. You also have the further problem that agreement does not imply willingness to implement the agreement.  Case in point: When I was with the US Trade Representative in the 1970’s, the then-Ambassador came back from Tokyo and announced that with an agreement to allow in US aluminum baseball bats, the Japanese market would now be open to Americans. The actual import of the aluminum bats took place almost a decade later. The Japanese negotiators were saying “Hai” to the point presented. It was translated as “yes” but the context was that “I hear you” not that “I agree with you.” There was a book on negotiating with the Japanese written in 1975 by Masaaki Imai entitled “Never Take Yes for an Answer.” The US negotiators should have read that book.
  

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11.14.07

International Negotiating — Step 3 - Pace and Timing

Posted in Negotiating at 5:19 am by Administrator

Negotiations have their own pace — and part of it reflects cultural aspects. The successful negotiator understands how the counterpart sees the negotiation and adjusts strategy to achieve the win-win situation. Here are some questions to think about:

• What is the expected distance between the various offers? In the markets of the Middle East, it is expected that the seller will ask a price many times the perceived value and the buyer will similarly give a very low counteroffer. In Germany, opening offers and responses are expected to be fairly close. If you begin a negotiation expecting a “reasonable” offer and receive a high one, that can be taken as a sign of bad faith. Similarly, if one is negotiating in the market place and come in at the “reasonable” level, the buyer will think you weak and will push for even greater concessions.
• When are the concessions made? The Soviets were particularly effective in negotiating with the US during the Cold War. The Soviet style was to have prolonged discussions and save any concessions (all of which had to be approved by the Kremlin) until the end. The US negotiators, expecting a series of mutual concessions throughout the negotiations, frequently arrived in the final sprint with only major concessions left to give, while the Soviets had many.
• How much authority does the counterpart negotiator have? In very hierarchical societies (and sometimes companies), the negotiator frequently has little room to deal at the table and most decisions have to be referred back to the home office. I ended up being in that position once — the US proposed an “open skies” civil aviation treaty for Central America and my instructions were no negotiating, i.e. take it as is or leave it. My Salvadoran colleague really wanted to deal but I couldn’t do anything. That wasn’t the most pleasant setting that I was in.

Leave a comment with your stories!

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11.09.07

International Negotiating - Step 2 - Cross Cultural Considerations

Posted in Negotiating at 12:27 am by Administrator

As part of my teaching and consulting work, I have given a workshop on cross-cultural negotiating many times. The most fun part is talking about the many things that can go wrong when negotiating with a person from another culture. Here’s part of a checklist that I give out. We’ll talk more about the details in a later blog:

–body language–

hands (where do you keep them - on the table? ; do you use them for gestures? what should you avoid –the OK sign for Americans is an obscene gesture in Brazil).

feet (putting your feet on the table in most of Asia is an insult)

eyes (do you look the other person in the face?)

physical distance (“invisible bubble” how close or distant do you stand? can you touch them. George Bush giving Angela Merkel a shoulder rub is very un-German!)

hierarchy - (many cultures get offended if you forget them. The Austrians love Herr Doctor Doctor (2 PhD’s)

formality (can you use first names; some languages have informal “you‘s — can you address someone in the informal voice?)

“face” (Can you point out a shortcoming? How about an assertion that you know to be untrue?)

food how to eat (can use your hands? The left hand in many cultures is considered unclean. And then there is the dilemma of the local delicacy that you may consider inedible — what if you are offered the camel’s eye? My diplomatic trainers told me to gulp it down and say how wonderful it was.)

drink (how, when and to whom do you make the toasts. The Japanese are very proud of their tea ceremonies.)

taboos (what can’t you talk about)

roles for men and women (How does the western woman do business in a traditional male dominated society?)

I’m sure you have your own examples, so use the comment box!

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11.07.07

International Negotiating - Step 1 -Ethnic and Corporate cultures

Posted in Negotiating at 4:52 am by Administrator

Negotiating is a strategic game like chess and international negotiating is three dimensional chess. As with all negotiations, the best results are win-win outcomes. Your job as the negotiator is to figure out what motivates your counterpart and craft a strategy that helps him/her to achieve his/her goals. The challenge is what is a successful outcome in one culture may not be considered so in another.

Let’s first of all talk about culture. There are two levels to consider. First of all, there is what you think of as the traditonal ethnic culture — Japanese, German, Mexican etc. Note that I talk about specific countries — if you approach it as an area - Asian, European or Latin American - you’re going to miss important differences and make some major mistakes. You may even have to be more specific - I would approach a Catalan differently than a Madrileño.

There are also corporate cultures. I was talking to a German manager who worked in Germany in integrating HP and Compaq. I asked him about the German and US business styles and he told me that was an easy issue to deal with. The real challenge for him was melding the corporate cultures. HP was used to integrative teams and open work spaces. Compaq worked in individual spaces and interacted less with co-workers.

Step one in the negotiating process is to understand the motivations as understood in the cultural contect of your counterpart. That means understand both ethnic and corporate cultures. I’ll talk next about some questions to ask to help you understand the cultures

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