Teams improve the overall quality of negotiations by finding creative solutions that work for both sides.
—S. Brodt
International negotiations are complex in nature, requiring the input of multifunctional and multicultural teams. Managing such teams can be even more difficult as team members have different interests, priorities, and values. Despite such difficulties, negotiating teams tend to reach more integrative agreements than individual negotiators due to the greater exchange of interests, priorities, and solutions.1 Generally, teams are expected to negotiate more effectively than individual negotiators. There are several benefits of using teams instead of individuals for negotiations. Some of the advantages that teams have over individuals are listed below.
• Teams have a greater expertise in handling specific/technical issues.
• Teams generate more options/alternatives.
• Teams increase the exchange of information.
• Teams reach higher levels of commitment.
• Teams are better placed to influence/persuade the other party.
Although negotiating teams are considered more effective, there are times their advantage can be affected negatively. Some of the most likely problems facing teams include the following:
• Lack of coordination among the team members
• Poor selection of team members
• Insufficient time for preparation
• Conflict with personal agendas
• Team leader not respected by the members
For negotiations calling for a large number of experts, it is advisable to divide them into groups, subgroups, or task forces to tackle specific/technical issues.
However, there are problems with teams that if not solved can lead to poor outcomes. To remove any personal conflict of interests as well as getting everyone on board and committed to the task ahead, it is essential to carry out internal negotiations during the preparatory phase. The more the team members have in common, the easier it is to build a unified team. For example, in a multifunctional team, the production specialist is primarily interested in the manufacturing process; the financial expert is concerned about costs, payment terms and/or return on investment; the marketing representative wants to discuss promotion campaigns; the purchasing manager is focused on getting the lowest price; the legal adviser wants to discuss contract clauses; the chief negotiator wants to obtain a deal that meets the organization’s objectives. It is up to the team leader to bring all these conflicting interests into a cohesive strategy before meeting the other party as a divided team is not in a position to negotiate successfully. Moreover, discipline and cohesion are one of the most critical aspects of managing negotiating teams. In other words, the chief negotiator can be compared to an orchestra conductor. Both have to plan in advance the input of each team member according to a set of guidelines and observe their given role in order to have a unified team.
Team Preparation
Internal negotiations are held during preparations and are often more demanding, stressful, and time consuming than external ones because the people selected to take part in the negotiation may have personal agendas, may have conflicting interests, or may simply be against the negotiations. In fact, one of the biggest challenges facing teams comes from internal conflicts or undisciplined behavior of its members. These preparatory meetings are well worth the investment in time, money, and staff as they ensure management participation in the planning and assessment of the risks involved as well as in evaluating individual performances. If the team consists of members having common goals, it is best suited for regular negotiations, whereas team members having different backgrounds and experiences are more suitable for specialized negotiations. In addition, these internal meetings provide excellent opportunities for reconsidering the team composition if necessary and for carrying out rehearsals. Although rehearsals and role plays are time consuming, they allow the chief negotiator to resolve internal conflicts and identify the best role for each member. Furthermore, these meetings are ideal for explaining the negotiation strategy, tactics, priorities, and when each member is expected to contribute and when not to.
Once the team strategy is agreed, the team leader assigns specific roles and tasks to each member to capitalize on individual competencies. In other words, each member should be made responsible for his or her assigned role. Moreover, team members tend to be more willing to commit if they are included not only in the planning and preparation stages but also in the development of the strategy and in the decision making process. The team leader has to decide when a team member should intervene and when he or she should remain silent. This is particularly relevant in the case of experts as they tend to give more detailed information than is required. For the team leader, it is no easy task to control the individual interests of the group, particularly when a member steps out of line. Too often, individuals wanting to impress their colleagues or to increase their role may negotiate more aggressively with the other party and tend to undervalue their concessions. For instance, during the middle of the discussions, the production engineer agrees to expedite delivery to meet the other party’s requirements without considering the extra costs involved. In such a situation, the chief negotiator must discreetly intervene to retake control of the discussions. Moreover, the team must not display any disagreements among themselves at the negotiating table as this will give the other party an opportunity to exploit this internal weakness.
Maintaining discipline among the team is necessary to avoid a breakdown in the strategy.2 The opposite can also occur when the team leader either ignores or fails to consult his staff when tackling key issues. For example, in the middle of discussions between negotiators from traditional cultures, one team leader was asked what will be the final price for an order of 80,000 metallic door handles. Without hesitation, he stated a price of $2.49 per unit when in fact the reservation price was $2.94. The offer was immediately accepted. Although the team members realized the mistake they did not want to intervene to avoid embarrassing their leader in front of the other party as negotiators having authority do not appreciate having their judgment questioned. By transposing two numbers, the firm lost $36,000 on the order due to the leader’s impatience and failure to rely on the team expertise. In negotiation, once a concession or a promise is made, it is not possible to take it back without jeopardizing one’s credibility.3
Team Makeup
How the team leader and team members are selected is crucial and must be carried out with great care. In any negotiation, the chief negotiator has to have a clearly defined mandate and has to be provided with the necessary resources to carry out the negotiation in the best possible manner. To be effective, the team leader needs to display leadership qualities and decision making skills as well as being sensitive to other people’s culture. To maintain a working relationship with the other chief negotiator, it is better for the team leader to let the technical staff handle toxic issues. Throughout the negotiations, team leaders should concentrate their efforts on the overall strategy while stressing the benefits to be gained by the other party through persuasion and cooperation.
In case the other party members consist of several engineers and only one or two financial analysts, it sends a strong signal that the main theme to be discussed will be technical. Similarly, if the other party is sending senior executives, it indicates the importance they are giving to the negotiations. Sending junior staff to negotiate with senior executives in traditional societies can lead to a breakdown in the discussions as it shows a lack of respect for status. As can be seen, managing negotiations is a demanding task, especially when the discussions take place away from home base and in different cultures. Some of the main duties and attributes of a chief negotiator are listed in Figure 12.1.
Figure 12.1 Attributes of a chief negotiator
As far as the size of the team is concerned, it is better to limit the team between five to ten members for maximum efficiency. Larger teams are known to be difficult to manage and less effective.4 For complex negotiations requiring ten or more members, it is best to set up subteams, each one responsible for specific issues. Another possibility for keeping large teams to a manageable size is to rely on availability of experts (internal or external) only when required, or to assign people with low priority expertise to be put “on call.” To optimize the inputs from experts, they should participate only when their expertise is required to avoid their intervention in areas outside their competencies, which can be detrimental to their own party. Experts with big egos, quick tempers, or acting individually should be excluded from the team. For negotiations calling for a large number of experts, it is advisable to divide the team into groups, subgroups, or task forces to tackle specific/technical issues.
Sending large teams can lead to delays in decision making, encourage dissension among the members, and provide greater opportunities for the other party to detect individual weaknesses. Another important aspect of team management is the need to speak in a single voice and for the group to enter and leave together.
The use of technical committees is recommended when one party needs to take breaks from on-going discussions to prepare counterproposals, or reconsider its strategy due to new information.
Security Issues
When negotiating international deals, particularly away from home base, there are a number of security issues that must be considered, although this applies to any negotiations. Handwritten notes, messages, proposals, counterproposals, and background documents should not be left behind or placed in a waste bin. Special care is required to avoid leaving documents in the photocopier or throwing away bad copies in the nearby waste basket. Although many firms have paper shredders to destroy documents, they are not always available. If documents require reproduction they should be printed away from the negotiation site to avoid potential leaks. Confidential documents should not be taken to the negotiation meeting unless absolutely necessary. In case the documents are essential to the discussions, they should be carried out by the team leader. Besides protecting yourself from leaking information, all these records provide useful reference material for future negotiation and should be fed into the company’s database.
Negotiating in another country may need visas, which can often be difficult and time consuming to obtain. In some countries, visas are given only when an invitation has been extended, placing the visiting party in a relatively weak position. Changing the dates of departures may not be possible due to the dates on the visa or due to problems in obtaining seats on flights. Sometimes, information may be leaked away from the negotiation table. For example, a Western firm was negotiating a significant deal with a company from another continent. After several meetings, the Western firm became suspicious about confidential information being passed to the other party. A security check was carried out at the headquarters and at the negotiation site to locate the source of the leak. The investigation did not find any security breach, yet information continued to leak calling for further investigations. With a little bit of luck, the investigators found out that during the ten hour flights, the firm’s negotiators chatted with their nearby passengers. What the negotiators did not know was the fact that the other party had booked adjacent seats with their own informants. Having several of their own people on the flights, they were able to gather sufficient information to decipher the other party’s upcoming strategy. To avoid information leaks, the chief negotiator should ensure that no members should be left alone with the other team.
Negotiation Site
Where the negotiations take place does influence outcomes. For this reason, both sides may prefer holding the negotiations in their environment to benefit from the “home court” advantage. The benefits from negotiating at the home base include:
• Selecting the site, seating arrangements, logistics
• Having quick access to staff, advisers, and files
• Showing facilities and landmarks
• Controlling the schedule and social agenda
• Benefitting from deadline pressure
• Saving travel expenses
• Avoiding jet lag (if any)
• Gaining a psychological advantage
There are times, particularly when considering doing business with a new firm located in another country and when holding discussions in the other party’s environment is advantageous—for checking on the reputation of the firm, inspect their facilities, its manner of operation. For example, a manufacturer of wood furniture exported most of the produce to several major markets and enjoyed a relatively good reputation abroad. The owner of the firm, however, had a reputation for having poor relations with his workers and management. One day while the owner was attending a trade fair in a foreign country, the factory was completely destroyed by fire. As a result, the buyers had to seek another source of supply at the last minute. Had the negotiations been held at the exporter’s home base, the buyers would have had a different opinion of the owner and possibly would have refused to deal with him.
If the parties agree to hold the negotiations at a neutral place, it is essential that it really is neutral. For instance, if one negotiator has lived previously at the selected site or speaks the local language, or the firm has a regional office at that location, is the place really neutral? When one party suggests a specific site, it is wise to make sure that other the party has no hidden agenda or unfair advantage. Small and medium enterprises may suggest meeting at nearby hotels to have appropriate space to hold the negotiations. Although hotels may be a more suitable location, the other party should ensure that the selected site does not favor either side. Irrespective of the location, the chief negotiator should encourage a positive atmosphere during the discussions.
Time of Negotiations
In addition to selecting the chief negotiator, team members, and the site, it is equally important to determine the most appropriate time to hold the discussions, particularly in cross-cultural contexts. Different dates may have different meanings in different cultures. For example, suggestion to start the negotiations on the company or the CEO’s birthday sends a positive message. Similarly, holding the negotiations on specific dates is considered to bring good luck while other dates may have negative connotations. In a number of cultures, certain days of the year are considered “auspicious” for initiating negotiations or for the signing of contracts.
For instance, the number 7 is viewed as a lucky number in many Western countries. Therefore proposing to start the discussions on that day of the month is likely to be considered favorably. In these cultures, holding negotiations on the 13th of the month is to be avoided, particularly if it is a Friday, as it could bring bad luck. In Russia, 6 is considered a lucky number. In China, 8 is viewed as extremely lucky as it is associated with wealth and prosperity. In Korea and Vietnam, 4 is considered as unlucky, while in Japan 4 and 9 are associated with bad luck. In addition, there are religious days considered as holidays when business is put on hold. In view of the importance given to numbers in various cultures, it is equally valuable to have the number of team members corresponding to a lucky number prevailing in the counterpart’s culture. The same applies to pricing as it is better to round up the last digit to fit the lucky number in that culture.
Summary
How a chief negotiator manages the team can make or break a negotiation. Negotiations are stressful, particularly in international deals requiring the expertise in a wide range of specialized fields. Managing negotiators require rigorous selection of the team members. To control the process, the chief negotiator must be given a clear mandate, obtain the full backing from higher authority, display people skills, maintain discipline, and control the discussions throughout the process. Carrying out internal negotiations before meeting the other party is critical to achieve the intended goal. The worst case scenario to avoid is when the chief negotiator is carrying two negotiations simultaneously, one with his or her own team and the other with his or her counterparts. Companies setting up cross-cultural and cross-functional teams with a strong leader have a competitive edge over other organizations when negotiating complex deals in the global economy.
After concluding a negotiation, the team leader should explain in detail the agreement to all the people expected to be involved in the implementation. That is the time to have a reality check, when implementers may discover that negotiators made too many concessions to get the deal resulting in potential problems when it comes to delivering. That is when most of the difficulties arise. Problems are not like fine wines—they do not get better over time. In the end, it is how the team negotiates that will distinguish it from the competition and open new possibilities for developing personal and business relationships.