Beyond Dealmaking E-Book

Melanie Billings-Yun

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 412

Veröffentlichungsjahr: 2009

Beschreibung

Getting to yes is not the same as getting results. In Beyond Dealmaking, international negotiation expert and mediator Melanie Billings-Yun shows that the key to winning unbeatable, long-term results in today's complex economic landscape is to -negotiate solid long-term relationships. Traditionally, negotiation has been approached as an isolated activity, separate from the business relationship. But those who focus only on getting the deal closed often find their victory doesn't translate into sustainable profits. Any deal is as fragile as the paper it's written on. Countless disputes arise and deals easily collapse when the negotiation -process leaves one party unhappy, feeling forced into unfair terms, or even disgruntled at a change in circumstances. In five clear steps, Billings-Yun takes the pain and fear out of negotiation with her proven GRASP method, showing how to: * Understand the Goals of all parties, beyond the immediate deal * Develop Routes to maximize mutual benefit and promote synergy among the parties * Build openness, trust, and common understanding through valid Arguments * Benchmark Substitutes to keep relationships from growing stale or one-sided * Increase your Persuasion through empathetic communication and genuine care Filled with real-life examples of negotiations that have gone right and wrong, this -groundbreaking book shows how fairness, honesty, empathy, flexibility, and mutual problem--solving lead to sustainable success. By following the powerful five-step GRASP -negotiation process, anyone can learn to negotiate in a way that is positive, exciting, and rewarding. Most importantly, they will learn that the greatest victories come not through fighting -battles, but through building alliances.

Leseprobe

Table of Contents

Praise

Title Page

Copyright Page

Dedication

Preface

Introduction

Negotiating Relationships

Taking the Fear out of Negotiation

Organization of the Book

Part 1 - WHY RELATIONSHIPS MATTER

Chapter 1 - THE GOAL IS NOT A GOOD DEAL, BUT A GOOD OUTCOME

Short-Term Fixation, Long-Term Loss

Deals Versus Relationships

Rules of Relationship

Why Go to All This Trouble?

Chapter 2 - EVEN MONKEYS DEMAND FAIRNESS

What Is Fairness?

Process Fairness

Equity

Conclusion

Chapter 3 - THE POWER OF US

Increasing Understanding

Building Trust

Maximizing Value

Reducing Resistance and Gaining Acceptance

Looking Beyond the Deal

Part 2 - THE MIND OF THE NEGOTIATOR

Chapter 4 - THE FOUR PILLARS OF RELATIONSHIP NEGOTIATION

The Four Pillars

Chapter 5 - DON’T FEED THE BEARS !

Lesson One: Feeding Bears Is Self-Destructive

Lesson Two: Bear-Feeding Damages the Relationship on Both Sides

Lesson Three: Feeding Bears Creates Bigger Bears

How to Handle Bears

Handling Grizzly Bears

Watch Out for Honey Bears

Conclusion

Chapter 6 - BE PREPARED

Understanding

Anticipating

Connecting

Part 3 - FIVE STEPS TO SUCCESS

Chapter 7 - GOALS—WHAT YOU REALLY WANT

The First Step

Goals Give Clarity

Why Do You Want This?

What Do You Really Want?

Three Types of Goals

What Do They Really Want?

Hotel Rate Case Study

Conclusion

Chapter 8 - ROUTES—HOW TO GET THERE

Get More of What You Want by Helping Others Get What They Want

Trading Off Beats Marking Down

Always Seek to Expand the Pie

Planning and Presenting Routes

Hotel Rate Case Study

Conclusion

Chapter 9 - ARGUMENTS—MAKING YOUR CASE

Arguments Show Respect

The Power of “Because”

Arguments Build Trust

What Are Acceptable Arguments?

Eliciting and Challenging Arguments

Hotel Rate Case Study

Conclusion

Chapter 10 - SUBSTITUTES—THE BACKUPPLAN

Knowing Your Walk-Away Line

Building a WAL

How to Reveal a Substitute

What If You Have No Substitute?

Remember That Both Sides Have Substitutes

Hotel Rate Case Study

Conclusion

Chapter 11 - PERSUASION—WINNING THEM OVER

What’s in It for Them

Be Positive

Stop Talking and Start Listening

Adapt to Their Communication Style

Hotel Rate Case Study

Conclusion

Part 4 - CONCLUSION

Chapter 12 - YOU CAN NEGOTIATE!

Appendix A - GRASP NEGOTIATION PLANNER

Appendix B - POST-NEGOTIATION EVALUATION

Notes

Acknowledgements

About the Author

Index

‘What a wonderful book on a difficult subject—an enjoyable read and a refreshing, natural, and straightforward approach to negotiation. Business anywhere is conducted on the basis of relationships, and in my experience the best business is based on superior relationships. We would all do well to be reminded of these principles that transcend markets, business types, culture, and geography.”

—Lane Kagey, COO, LG International

“The greatest business lesson of the 21st century is that we have to think sustainably. Beyond Dealmaking demonstrates persuasively how this process can and must start at the negotiating table. Melanie Billings-Yun’s smart, friendly style makes her the perfect guide to show you how to negotiate long-term success by thinking beyond the deal.”

—Russell Read, senior managing partner, C Change Investments

“Beyond Dealmaking gets you thinking about what ‘the deal’ means to a long-term business relationship—much like the wedding is to a successful marriage, it is only a first step. Melanie Billings-Yun gives the reader the insight and tools needed to plan for and negotiate agreements that will be the basis for longstanding and mutually beneficial business relationships.”

—Matthew Gerber, president and CEO, SprayCool

“In Asia we have long known the importance of relationships in creating a successful and sustainable business. Unfortunately, this lesson is lost on many in the West who go after the quick deal, only to see their fortunes fall just as quickly. Beyond Dealmaking is a great antidote to this short-term thinking. I highly recommend it to all who negotiate in Asia or anywhere in the world.”

—Young-Ho Park, president and CEO, SK Holdings

“Beyond Dealmaking is a practical guide on how to think differently (and positively!) for lasting results, whether at home, in your community, or in corporate boardrooms around the world.”

—William Tung, vice president of Latin America/ Asia Pacific, Columbia Sportswear

“Melanie Billings-Yun’s insight and experience as a leading negotiation consultant have given her the unique opportunity to develop an innovative vision and a simple yet effective approach to negotiating, which will drive you and your business to higher levels of success.’

—Ellen Devlin, former general manager, Nike Korea and Nike Thailand

Copyright © 2010 by Melanie Billings-Yun. All rights reserved.

Published by Jossey-Bass A Wiley Imprint 989 Market Street, San Francisco, CA 94103-1741—www.josseybass.com

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Library of Congress Cataloging-in-Publication Data

Billings-Yun, Melanie.

Beyond dealmaking : five steps to negotiating profitable relationships / Melanie Billings-Yun.

p. cm.

Includes bibliographical references and index.

eISBN : 978-0-470-56429-5

1. Negotiation in business. 2. Deals. 3. Success in business. I. Title.

HD58.6.B53 2010

658.4’052-dc22

2009038854

To Joe, my husband, adviser, and lifetime negotiation counterpart

Preface

Why do so many people dislike negotiation? For most it calls up the grueling and nerve-racking image of buying a used car. In fact, many seem to equate negotiation with behavior that is at best morally questionable. “I’m not any good at confrontation,” I have been told by countless nervous clients at our first meeting. “You’ve got to be clever at outwitting the other side, bluffing, reading minds, spinning information, fast-talking.” Or they may say, “I’m too nice/honest/soft-spoken to be a negotiator.” Or simply, “I don’t like fighting.”

It’s time to clear up these paralyzing misconceptions. Negotiation is not the art of war. That’s fighting. It’s not about outfoxing people. That’s trickery. It’s certainly not fast-talking, which is, well, simply annoying. Rather, as you will see over the following pages, negotiation is the process of connecting with another person or persons, resolving your differences, and coming up with solutions that will allow you to collaborate profitably and satisfyingly beyond the signing of the deal. In short, it’s about creating a relationship.

As hundreds of nice, honest, soft-spoken people have found through my training programs, approaching negotiation as the first step in building a mutually beneficial working relationship changes everything. Relationship negotiation draws on a constructive skill-set. Destructive behaviors—aggression and deception—may be effective methods for getting others to agree to what you want (people will promise just about anything under torture), but they almost never inspire others to faithfully carry out those agreements, to be fair and honest with you, to work with you willingly, to give you the benefit of the doubt when problems arise, to do business with you again, or to speak well of you to others. Those cooperative actions are built not on coercive terms, or even on contractual terms, but on trust, affinity, and a belief that you are concerned about the other’s interests as well as your own.

How does relationship negotiation differ from the standard approach to negotiation? Many negotiation books, starting with the groundbreaking Getting to Yes (which was being conceived just down the road at the Harvard Law School while I was directing a research program on the lessons of history at the Kennedy School of Government), have recognized that building friendly and open relationships is an important step in gaining agreement. These authors are on the right track but are still aiming short of the goal. (Perhaps my different perspective originates from the longer-term view of the historian as opposed to the contractual focus of lawyers, for whom the signing of the deal brings closure, a black-and-white snapshot of terms to be carried out. Historians look at human actions, especially at what happens after an agreement is signed—often finding results to be quite different from the promises that preceded them.)

Closing a deal and creating an understanding that will be implemented fully and freely present two very different objectives for the negotiator, with vastly different payoffs. If your eye is on the higher-value target of ensuring that the agreement is implemented, relationship-building cannot be seen as a mere step toward the immediate aim of getting a “yes.” To achieve the greatest long-term value from a negotiation, relationship-building must be the goal, with the negotiation of agreements being positive steps toward achieving that goal.

This is an important distinction, because few of the negotiations you will take part in over your lifetime will involve onetime transactions such as buying or selling a car. Mostly you will negotiate with people with whom you have ongoing relationships: regular suppliers, repeat customers, bosses, employees, team members, co-workers, neighbors, family members. If you negotiate with these relations transactionally, focusing only on getting your terms, you will find yourself at an increasing distance from the people with whom you regularly deal, and less and less able to get them to give you what you want. If, on the other hand, you approach them from the perspective of the relationship, each encounter will become easier, more positive, and ultimately more productive.

This book will provide you with the why and how of relationship-negotiating. It is based on my observations from nearly two decades as a negotiation consultant and trainer in the United States, Asia, Europe, and Australia with clients from a broad range of nationalities and professions, as well as my experience teaching in business schools in Asia and the United States. Most of these observations have been direct, from negotiations in which I was personally engaged. Some come from the experiences reported to me by people I have trained, with whom I have stayed in touch over the years. Every story or example in this book, except where clearly indicated otherwise, is a true account drawn from those negotiations.

That said, I have made three modifications, which I will disclose at the outset. First, to preserve my clients’ confidentiality, the identifying elements in most cases have been altered. The story is real, but the person and company have been renamed. Second, I have made the stylistic decision to use quotation marks to give certain examples more immediacy. While the spirit and overall content of those quotes match what the speaker said at the time, the wording is based solely on my memory. I lay no claim to word-for-word historical accuracy. Third, I have simplified some of the examples to make a specific point. This is a sin of omission rather than commission. What is described is true, but I have left out what I felt to be irrelevant or needlessly confusing. Negotiations tend to be lengthy, convoluted, rambling, and quite often tedious. When a point could be made without introducing unnecessary complexity, I have done so.

Finally, in hopes of making these lessons as straightforward and as easy as possible to absorb and apply, I have focused on two-party negotiations. While managing group dynamics is an important advanced negotiation skill, it’s more useful to start by learning how to uncover a single counterpart’s goals, for example, than by imagining the possible needs, desires, and aspirations of an entire committee. In this book my aim is to help you build confidence using the tools of the five-step GRASP negotiation method in one-on-one situations so that you can quickly begin reaping the many benefits of relationship-based negotiation.

Whether you’re reading this because you’re tired of being taken advantage of, are fed up with having hard-fought negotiations collapse before they can bear fruit, or are looking for a more positive way to resolve differences, I assure you that if you follow the methods and lessons in this book you will reap tangible, even amazing, results as negotiation goes from painful and punishing to positive and rewarding. Even those who cringe at the sound of raised voices can learn to be master negotiators, while discovering that the greatest victories come not through fighting battles but through establishing profitable and satisfying relationships.

Introduction

If the recent economic collapse has taught us anything, it is that the pursuit of immediate gain with no attention to the long-term consequences is a recipe for financial disaster. The gains accumulated were primarily on paper, but the losses have been painfully real. The problem was that far too few people were looking beyond the deal to see whether it would result in a positive outcome. Mortgage brokers got paid bonuses for signing off on loans, regardless of whether those loans could ever be repaid. What did it matter if the borrower, who had been passed off onto some other institution, defaulted down the road? The answer became agonizingly clear when banks and mortgage companies began to sink under unpaid debts, when borrowers who didn’t lose their homes saw their house values plummet, and when the brokers who had generated those billions of dollars of paper profits found themselves on the street.

The folly was in thinking that the deal itself is the goal, that a promise is the same as an outcome, and that once you get a signature on a piece of paper, your relationship with the other party is over and the money will begin flowing in of its own accord. Sounds silly in retrospect, doesn’t it? Yet that is the way most books still portray the objective and process of negotiation. Your target, they say, is a deal.

Unfortunately, that narrow focus misses the real point. As anyone knows who has done business in Asia or the Middle East, sold a mortgage to someone who had no realistic way to pay it, or, frankly, has been married, getting to “yes” is not the same as getting results. The other parties may say yes to be polite or to make you go away when they feel cornered by forceful tactics. They may agree to promises they have no intention of keeping, because they feel no connection and therefore no moral obligation to you. The challenge for business, government, and society is not in getting people to make promises but in getting them to carry out those promises fully, willingly, and consistently. That can only be accomplished through changing your negotiation target from making a deal to building an honest and mutually committed relationship with the people who will be carrying out that agreement.

Negotiating Relationships

In the same way that the vows made in a wedding ceremony don’t guarantee a happy marriage, contractual terms won’t ensure smooth and successful business. The marriage license only “closes the deal” to the extent that it opens the door to a potentially fruitful union. The success of the marriage—or the business partnership—depends on the parties’ willingness to make it work because they feel committed to the relationship and satisfied that they are benefiting from it.

Have you ever agreed to something, but the negotiation process left you so annoyed or demeaned that you were just waiting for a way to back out of the deal or even the score? Imagine that your boss calls you into his or her office to tell you that the company needs you elsewhere, so you either accept a transfer or you lose your job. You may agree to the transfer as a stopgap measure, but are you secretly looking for another employer? Even if you find nothing else and so are forced to accept the transfer, are you as committed an employee as you once were?

Let’s take a less clearly personal case. A customer’s procurement manager drives your professional service firm’s contract down to a rock-bottom price by continually reminding you of their company’s negotiation power and threatening to drop you for a cheaper competitor. You may reluctantly sign on to the deal, but wouldn’t you secretly want to get even by socking them with variation orders for every little extra they request, things you would willingly throw in for other, more likeable clients?

And those are just the deals that got to yes. I would lay odds that you can remember walking away from a potentially profitable transaction simply because you didn’t like the attitude of the negotiator on the other side. The terms were acceptable, but the way you were being treated was not. You felt so accosted or demeaned or ignored that you didn’t want to have anything more to do with that person or that company. At bottom, you felt the deal just wasn’t worth the emotional cost.

You can’t expect people to carry out agreements faithfully when one moment you call them valued partners and the next you treat them as mere tools, or obstructions, in your quest for short-term profitability or convenience.

A new negotiation paradigm—away from negotiating a deal and toward negotiating a relationship—is needed for the twenty-first century, because the business landscape has fundamentally changed. Businesses can no longer stay on top by negotiating short-term victories. Nor can any organization hope to navigate the increasingly complex economy by pursuing an endless cycle of zero-sum transactions. The key to winning unbeatable, long-term results is to negotiate solid, long-term relationships.

Thousands of companies and individuals have profited handsomely from the concept of “relationship selling.” Yet I was struck painfully by the words of Jim Cathcart, one of the founding fathers of that movement, who distilled his sales philosophy as the rejection of a negotiation mentality. “Business should be practiced as an act of friendship, rather than merely as a process of negotiation. It is about connecting with people profitably, not merely persuading them to buy,” Cathcart writes.1 Where does that leave negotiation? As the opposite of friendship and good business practice? Sadly, the notion of negotiation as hostile, self-interested, and manipulative has been reinforced by negotiation “experts” who advise you to “start from ‘no’ ” or who promise to teach you “how to beat the opposition every time.” It is precisely this thinking that has led to so many unprofitable or unworkable deals and that makes negotiation stressful and distasteful to the great majority of people.

It doesn’t have to be that way. All we need to do in order to move from transactional, deal-centered negotiation to relationship-centered negotiation is turn the relationship sales philosophy slightly around: Negotiation should be practiced as a process of profitably connecting with people, rather than merely as an act of persuasion. Only then will we be on our way to achieving truly winning results.

Taking the Fear out of Negotiation

“That’s great in theory,” I imagine many of you thinking as you read this, “but what if I’m not a gifted speaker? What if I don’t think quickly under pressure or I become emotional when confronted?”

Here’s the good news. Relationship negotiation doesn’t require you to be eloquent, cunning, tough, quick-witted, or fast-talking. There are no prizes for speed or sleight of hand when laying a strong and rewarding foundation for the future. Instead, the basis of your negotiating power is advance preparation, openness, empathy, patience, and a sincere effort to reach a mutually successful agreement. These are competencies to which even the humblest among us has equal access—but only a select few use to their greatest advantage. This book will provide you with the tools to develop and get the most out of those competencies.

Preparation also helps keep undesired emotions (whether your own or the other party’s) in check. Emotional reactions are very like nerve reactions: they’re set off by shock. Just as we can’t tickle ourselves, because our brains know what’s coming, we’re far less likely to become upset if we anticipate that others may react negatively at some point in the negotiation—whether it’s because they generally have volcanic personalities or they’re likely to feel upset by some specific aspect of the discussion. And we’re far less likely to set off that negative reaction if we have considered in advance, for example, that Ben generally gets flustered when he’s under time pressure or that Sarah, who has put a good deal of effort into formulating her proposal, will probably feel hurt and angry when we reject it. By anticipating problems, we can change our approach in an effort to avoid or at least mitigate them: when we negotiate with Ben, we first ensure that we have set aside sufficient, uninterrupted time; when we reject Sarah’s proposal, we give her a full explanation why as well as positive suggestions she can take away. This book will show you how to understand the other side and, through understanding, to anticipate reactions. The payoff of preparation and empathy is not just that they enable you to allay negative reactions and deflect confrontations before they occur; you will also find a marked reduction in your fear of negotiation.

Over the years, I have trained thousands of negotiators from all walks of life—men, women, old, young, businesspeople, social activists, public servants, Asians, Americans, Europeans, Middle Easterners; the list goes on. Almost all started out admitting that they disliked, even feared, negotiation. Yet those same people reported a stunning change after becoming skilled at the GRASP relationship negotiating method (see Part Three). Negotiation, they told me, had gone from being a painful, even humiliating, experience to a rewarding one, not just improving their effectiveness on the job but enhancing the relationships in their private lives as well. I assure you, those people were no more naturally gifted than yourself. What enabled them to be so successful was that they had learned to approach negotiation in a new way, just as you can by following the steps in this book.

Organization of the Book

Beyond Dealmaking has two objectives divided among three parts. Part One, “Why Relationships Matter,” sets out to demonstrate the importance of negotiating open, mutually beneficial, and trusting relationships—and the terrible risks we run by ignoring them. Why do so many deals jump from handshake to heartburn? Why is it that “yes” so often fails to lead to positive action? Real-life examples drawn from every possible type of negotiation will show the impact of fairness, honesty, empathy, flexibility, and problem-solving on the success or failure of negotiation outcomes. From those stories and lessons you will see that

• Negotiation isn’t a battle or a game—it’s simply finding a way to work profitably together.

• People do business with people they connect with.

• Cooperation is based more on a sense of fairness than on contracts.

• Building a positive relationship starts with the first date, not after the wedding.

• Healthy relationships have to work both ways.

The second aim of the book is to provide a practical guide for achieving outstanding and sustainable negotiation results, whether across continents, within your own organization, or among family members. This objective is covered in Parts Two and Three.

Part Two, “The Mind of the Negotiator,” focuses on the basic approach to negotiating value-enhancing relationships. It stresses the importance of planning, connecting, understanding, problem-solving, reciprocity, and holding firm against one-sided demands.

Part Three, “Five Steps to Success,” presents the step-by-step GRASP negotiation model, a method for negotiating profit-maximizing and durable partnerships that has been used successfully by thousands of businesspeople, public officials, NGOs, and private men and women around the world. (If you want to get straight to the GRASP method, you can skip over Parts One and Two; however, I strongly recommend that you read Chapters Two, “Even Monkeys Demand Fairness,” and Five, “Don’t Feed the Bears!” before you start negotiating.)

The GRASP model breaks down negotiation into five steps:

• G: Understanding the Goals of all parties, beyond the immediate deal

• R: Developing Routes to those goals that will maximize the benefit of all parties

• A: Promoting fairness, trust, and common understanding through valid Arguments

• S: Benchmarking your current relationships against possible Substitutes

• P: Increasing your Persuasion through open and empathetic communication

The name “GRASP” is more than a memory device; it symbolizes the primary focus of this book. To grasp means both to hold on to something firmly and to understand. The GRASP method creates firm commitments because they are built on understanding, not on gamesmanship. By learning this simple but powerful method and using the GRASP Negotiation Planner at the end of this book (see Appendix A) as an aid in planning your next negotiation, you will discover that negotiation can be a positive, creative, and, most important, genuinely rewarding experience. I welcome you onto this journey.

Part 1

WHY RELATIONSHIPS MATTER

Chapter 1

THE GOAL IS NOT A GOOD DEAL, BUT A GOOD OUTCOME

When I began working as a professional negotiator, I envisaged myself making deals: helping companies reach strong and profitable commercial agreements. Instead, I was inundated with contractual disputes, business alliances in trouble, partnerships on the rocks. The disputes ranged from relatively small local purchase and sales transactions to multimillion-dollar international ventures bound by detailed contracts; from recent fallings-out to old battles that had nearly exhausted the parties in courts. Yet, despite this diversity, they had one important thing in common: they had all started out with “yes.”

The phenomenon transformed my view of negotiation. Until then I had focused on negotiation as a transaction, with a concrete set of objectives and a definable end. The negotiator’s goal, according to every book I read, was to secure a set of terms that would maximize “our side’s” gains while giving enough value to the other side to win their agreement. The end of the negotiator’s line of sight was an agreement. While he or she might anticipate and try to reduce implementation problems by peppering the contract with performance guarantees, liquidated damages clauses, and so on, the focus remained firmly on the deal.

Yet experience showed me plainly that getting a deal, even a “good” deal, was not enough. Every one of these expensive and emotionally draining disputes had started out as a deal that both parties had felt was good—at least good enough to sign on to at the time. So why were so many going bad? The answer was clear: they were failing to create successful working relationships. A deal is nothing but a promise. A relationship—marked by open, two-way communication, respect, empathy, trust, reliability, and sincere efforts to promote long-term mutual benefit—is what will see that promise through implementation and beyond.

Short-Term Fixation, Long-Term Loss

My first consulting client opened my eyes to the importance of looking beyond the deal. Choi had a thriving business importing American meat, which he sold to the many Western restaurants and chains that were popping up across Korea. For several years he had bought beef from a single supplier in Texas, his orders more than doubling each year. However, things changed suddenly in November 1997 when Korea was hit by the Asian financial crisis.

Virtually overnight, Korean currency dropped to less than half its value against the dollar. Banks desperately called in loans in hopes of avoiding collapse. To stave off national bankruptcy, Korea had to accept an IMF bailout and trusteeship, a painful humiliation. Worst of all for Choi, the Korean public reacted to the crisis with an intense wave of nationalism: boycotting all foreign products and businesses. By December, usually the busiest time of year in the food industry, the only people to be seen in foreign-linked restaurants were the staff.

Reeling from the one-two punch of currency devaluation and customer desertion, Choi called his supplier to say that he would have to cancel the orders he had contracted for the next several months, until the economic situation in Korea improved and the boycott was called off. He expected some sympathy, even words of support for his plight. It was, after all, a national crisis, not a business failure—and the supplier, as it had stated many times, was his “valued partner.” Instead, he was stunned a few weeks later to receive a letter of demand from the beef exporter’s lawyer, telling him that by failing to pay on time for his last order and canceling his precommitted next order, he was in violation of their contract. If he didn’t immediately rescind his cancellation, the letter said, they would sue.

When Choi came to see me to help him negotiate a settlement, he was gripping the letter tightly in his hand and shaking it as he spoke. “I’ve been giving these people my business for four years,” he fumed. “I went to visit their ranch. I even invited them to stay in my home. MY HOME! Now, the first time I have a problem they send me this?” He flung the letter onto the table in disgust.

I tried to explain to Choi that the supplier was just switching into automatic contract-compliance mode, not specifically picking on him, and that the language in the letter was standard legalese, not a personal insult. But it was clear that neither explanation took away the sting. More helpfully, I told him that I thought we could resolve the matter by coming up with a plan to extend the payments and orders over a longer period. He agreed, but kept repeating numbly, “I have given them my business for four years. I had them into my home.”

In fact, we easily resolved the business dispute. Within months, Korea was on its way to economic recovery, and Choi was able to recommence business and complete the contract. However, once he had fulfilled his order, he refused to do business with the Texas supplier ever again. Over the next years the Korean economy thrived and Choi’s business boomed. However, it was another meat supplier who reaped the benefits.

The Texas company had thought transactionally. While they were fully within their rights to enforce the terms of their contract, they missed the bigger point. By treating a business partner as nothing more than a set of agreements and showing concern only for their own interests, they failed to connect with him as a human being trying to do his best under difficult but temporary conditions. By focusing exclusively on the deal at the expense of the relationship, they sacrificed much greater long-term business profits.

Looking beyond the deal doesn’t mean ignoring commitments. Commitment is what differentiates relationships from one-night stands, or healthy business partnerships from single transactions. For the beef supplier to have said, “Okay, never mind. Times are tough. Let’s just drop the whole thing,” would be no more relationship-oriented than shouting, “Pay up or else!” However, there are a number of things the cattle company could have done to strengthen the relationship and maximize long-term business gain during this difficult time.

Most important, the president, who had negotiated the original deal with Choi, could have spoken to him personally and collaboratively, as a partner facing a crisis that was hurting both their businesses. This would have opened the door to joint and productive problem-solving, possibly even to finding new areas for mutual gain, such as taking advantage of the Korean currency’s weakness to import to America ranch machinery or vehicles at reduced prices. Instead, by sending a letter of demand through the company’s lawyers, the president conveyed the messages that “I’m not interested in your problems,” and “I only posed as your partner to get the contract.” The result was that the Texas company not only lost Choi’s loyalty and the profits their relationship would have generated over the long term, but also suffered a reputational loss as Choi recounted his tale of fair-weather friends throughout his wide business network.

Deals Versus Relationships

Negotiating relationships is a process, not an act or a transaction, because it doesn’t have a clear beginning or end. Nor, like a contest on the playing field or in the courtroom, does it have one winner and one loser. Your goal is to reach an agreement to work with another party in the future, under conditions that enable both sides to prosper.

Traditional deal-based negotiation is transactional. It’s about this deal, these terms. Get a signature, and you’re done. With its emphasis on winning and losing, transactional negotiation is frequently compared to a game (of wits) or a battle (of nerves). But there is a crucial difference between reaching an agreement and competing in a game or fighting a battle: games and battles don’t require cooperation once they are concluded.

There are other critical differences:

• In a deal, the goal is confined to getting an agreement. In a relationship, the goal is working together profitably, starting from the first agreement, then building far beyond it.

• In a deal, the party you are negotiating with is, to a large extent, your opponent. In a relationship, the other party is your preferred partner.

• Deals are about getting as much of what you want as you can carry away. Relationships are based on fair division and joint burden-sharing.

• In a deal, you hold yourself aloof from the other party: hiding information, guarding your responses, pressing your position. In a relationship, you are more relaxed, open, and natural: sharing information and truly seeking to understand and resolve differences.

• In a deal, you may exaggerate the strength of your position or try to trick the other side into giving in. Successful relationships are based on honesty, reliability, and follow-through.

• Deals are static, inflexible, with exhaustive contracts intended to guarantee that every term and condition will remain “carved in stone” until the transaction is completed. Relationships are also based on fundamental agreements, but they are more accommodating, less rigidly detailed. Because relationships take place over time, change needs to be anticipated and managed constructively rather than ignored because it falls outside of the scope of the initial agreement. Relationships are dynamic, not carved in stone.

Not all deals require relationships in order to succeed, of course. When you sell your old car through an online ad or bargain over a ceramic pot in a foreign market while on vacation, it truly is a transactional activity. The goods are delivered the moment the deal is sealed, and you are unlikely ever to see that person again. But such cases are the rare exception. Most negotiations—from mergers and acquisitions, to supplier contracts, to interdepartmental meetings for allocating funding or agreeing on where to hold the company picnic—are for arrangements that will be implemented over time (sometimes years) or that will lead to future arrangements. Even when you are unlikely to meet that individual customer or supplier or even colleague ever again, the relationships you build throughout the negotiation and implementation process will have an impact on your future business by shaping your reputation and the number and type of references you receive.

Here is an example. Last year I bought a houseful of furniture for our new home in Oregon. The salesman was wonderful to work with. Even though he knew that this was a onetime deal (I had made it clear that there were no more rooms in the house to furnish!), he treated it as a relationship. He asked me how I wanted to work with him. When I said I preferred to be left alone until I had made up my mind, he honored that request. He gave me information and pointed out other possible options I could consider, but he never forcibly steered me toward a more expensive line or pressed me to buy unwanted extras. Because it was a large order, I was able to negotiate free delivery and assembly. The negotiation was pleasant and professional. At no point did the salesman make me feel like he was doing me a favor. Most impressive, a week or so after the delivery he called to make sure that everything had been installed to my satisfaction.

Had the salesman treated this as a transaction, wringing the most he could out of the sale, he might have come out with a higher immediate gain. (On the other hand, I might have walked out of the store having bought nothing, as I had at two previous furniture showrooms with overbearing salespeople and take-it-or-leave-it attitudes.) However, by treating this as a valued relationship, he came away with a number of longer-term benefits. First, I wrote a note to his boss, saying what a great salesman he was and crediting him for the size of the purchase. When the furniture arrived a bit late, I took it in stride, having enough stored goodwill toward the company to accommodate a few small difficulties. Since then I have regularly recommended the store—and that salesman by name—to family and friends who are looking for furniture. I even made it a point to try out his parents’ restaurant, which he had mentioned when we were chatting after the sale.

Let’s compare this to the very different experience my friend Jeremy had with the agent managing the commercial property where he had his office. The property market had boomed in his area, and landlords were feeling their power. Hoping to lock him in at the current peak price, three months before Jeremy’s initial lease was to expire the landlord sent him an e-mail informing him that they were planning to raise his rent by 80 percent and warning that if he didn’t commit to another two-year lease within the next week they couldn’t guarantee the “goodwill” rate. The tone could best be described as officious. When Jeremy called the landlord’s agent to discuss ways to reduce the increase, the agent was unashamedly rude. “We have people lining up for this property,” she said. “There’s nothing to discuss. Do you want the deal or not?”

Feeling trapped because he had just paid for some expensive office renovations, Jeremy reluctantly signed the lease. But after that, he made it a point to document every failure of the management or minor problem that occurred, from elevators breaking down to undue noise during office hours. When people asked him if there was space available in his building, he warned them away from “those bloodsuckers.” Six months later, when the property market started to decline, Jeremy couldn’t stand it anymore. Although he knew that by breaking the contract he risked legal action and would suffer expensive relocation costs, he moved out. When the landlord threatened to sue to collect the amount remaining on the lease, Jeremy shot back with his evidence of the building management’s negligence and said he was ready to go to court and make it public. The landlord settled, with Jeremy forfeiting only his initial rent deposit.

Who benefited more? The furniture salesman, who approached a onetime deal as a relationship, or the landlord, who approached a multiyear relationship as if it were a transaction?

Rules of Relationship

Relationships exist at many levels of intimacy. They are not all deep or lasting. No doubt in your own life you have experienced a wide variety of personal relationships: from classmates or colleagues you work with on a daily basis for a fleeting time, to the hairdresser or barber you see once a month for years, to family and friends with whom you share intimate bonds throughout your lifetime. Obviously, these very different relationships require different levels of trust, openness, and commitment.

Commercial relationships run the same gamut: from small customers who purchase limited quantities of your product, to giant retailers who buy up nearly all of your output; from suppliers who sell you readily available commodities, to high-tech manufacturers who provide you with customized components. You have relationships with business partners, service providers, clients, consultants, employees, bosses, and colleagues. Despite the vast differences among these relationships, they all involve people with whom you work and share a mutual dependence.

Every relationship, regardless of depth, requires words, attitudes, and behavior that express a positive connection. Here is my top-ten list for negotiators:

• Respect, friendliness, a sense that you like the other person as a human being, not merely as a means, or obstacle, to your end

• Fairness in distributing and carrying out both responsibilities and benefits

• Honest, open, and positive communication

• Care and concern for the other’s well-being, both within and beyond the immediate transaction

• Empathy and understanding

• Collaborative efforts toward mutual success

• Reciprocity, returning favors, responding to trust with trust

• Open-mindedness, flexibility, and willingness to adapt to different ideas and to changes

• Appropriate commitment at each stage of the relationship

• Dependability, maintaining your understandings, and following through with your promises

This may seem to be an overwhelming list, but it’s actually the way we approach normal human relations. Think of even a casual friendship—say with a colleague or neighbor—and you will see that you instinctively follow all of these rules to some extent. You want nothing from these informal associations besides the general benevolence of the other party, and yet you take the positive steps needed to gain and maintain their goodwill. You smile and say good morning; you show concern and care when he appears with his arm in a sling; if she offers you a gift of some vegetables from her garden, you share something with her some other time. This is the natural way human beings interact to create smooth and cooperative relationships.

Why then should it be less natural or intelligent to show the same positive manner toward the person on the other side of the negotiation table, whose active collaboration you are pursuing and whose cooperation you will rely on for your own success in carrying out the agreement? Simply stated, it’s not. The grave danger is becoming so focused on the deal that you forget the human being with whom you have to fashion the deal, the person who will say “yes” or “no” to the terms you propose, and the people who will implement any final agreement.

Let’s look at each of these attitudes and behaviors within a negotiation context.

Respect, Friendliness, and Liking

Whether you are negotiating a deal or trying to resolve a dispute, it almost never pays to be nasty or to demean the other side. It’s such common sense that it’s hard to understand why so many people choose a hostile approach. Ask yourself: Do you feel more cooperative toward people who put you down or who, while you are talking to them, scowl at you or roll their eyes? Does having someone reply to your friendly overtures with a silent poker face make you feel more relaxed and creative or more defensive? You wouldn’t be in the negotiation if you didn’t share a common interest in working together, so why pretend otherwise? Unfortunately, many people seem to believe that acting surly gives them an edge. Mostly, it just creates resistance.

I have seen negotiations fall apart because one side comes on aggressively or dismissively, such as perpetually reminding the other how much bigger their company is than their counterpart’s or using body language that signals contempt. All this does is set off a defensive reaction, along with alarm bells over how unpleasant any working relationship with that party might be. In extreme cases it leads to direct retaliation. A very successful Indian businessman told me how he had walked out of an acquisition negotiation because the attorney on the other side, a white South African, had opened the meeting by shaking everyone’s hand but his, the only dark-skinned person in the room. When I asked him if he had damaged his interests by passing up what he admitted was a lucrative deal, he replied nonchalantly, “There are so many fish in the ocean. Who needs a rotten one? I just made the deal with someone else.”

Disrespect also leads to indirect retaliation. A supplier to Ford Motor Company found a unique and very effective way of getting back at the automaker for what he felt was its procurement department’s bullying negotiation tactics. He shared his experience in an article published in the Harvard Business Review, whose U.S. circulation runs to a quarter of a million. The automaker, he complained to all who would hear, “seems to send its people to ‘hate school’ so that they learn to hate suppliers. The company is extremely confrontational. After dealing with Ford I decided not to buy its cars.”1 He may have continued to work with Ford for economic reasons, but he had exacted his revenge.

On the other hand, people are far more compliant with someone who is likeable and behaves as if he or she likes and respects them. You create liking through affiliation (establishing likeness) and affirmation (giving praise).2 Affiliation is as simple as finding something you have in common with the other person. Informal conversations before the negotiation uncover those points of connection, reducing emotional distance and creating the beginnings of a relationship. I may be American and you Russian, but if we both love Tolstoy or have studied in Paris, we become less wary of each other. As the connections grow, so does our willingness to help each other out.

Offering praise is the other building block of liking. Some people are afraid to praise, feeling that it weakens them in a negotiation. In fact, it’s quite the opposite. Of course, you mustn’t get carried away: fawning and flattery are simply annoying. But offering a genuine compliment to another’s attributes (“What a beautiful office you have!”), accomplishments (“We are very impressed with the quality of your prototype”), attitude (“I really appreciate your efforts to resolve this”), or actions (“That’s a great help. Thanks!”) makes the other feel appreciated. Appreciation opens the door to cooperation.

At a minimum, whether you are negotiating a deal or a dispute, you will come out ahead by being pleasant and respectful to everyone at the table, using their names, starting off with a smile, listening politely and sincerely, and continually sending off positive signals that you want to work with them. Friendliness does not mean that you can’t be firm or that you’ll only say things the other party wants to hear. It doesn’t require acceptance of their viewpoint or acquiescence in their wishes. It simply means never being personally insulting or pointlessly disagreeable.

Fairness

Fairness will be dealt with at length in the next chapter. However, it deserves a quick mention here in the context of friendliness. A common negotiation misstep is to use cooperative language while pursuing utterly one-sided gains. A negotiator might start off with a big smile and say, “I’m looking for a win-win deal,” then do everything in his or her power to win the whole lot.

To be effective, friendly words have to be matched with discernibly fair treatment. The two add up to sincerity. Friendliness without fairness appears as mere wolfish manipulation and can create a powerful sense of revulsion that may not only destroy long-term relationships but even overturn a signed deal. In fact, experiments performed by neuroeconomists on negotiators connected to MRIs found that perceptions of unfairness cause the brain to light up in the same area as when one is physically affronted by a repulsive taste or smell.3 When the unfair demand follows a friendly lead-in, the reaction is particularly bitter—like taking a spoonful of what you thought was honey, only to get a mouthful of motor oil!

Honest, Open, and Positive Communication

When I teach negotiation, I am regularly astonished by the number of otherwise decent people who approach their first role plays by shutting down all honest communication. They may seek to mislead the other side by hiding their true objectives, pretending they want things they don’t actually want and claiming that they don’t want things they do. Or they will clam up, revealing nothing at all. When asked what their priorities are or what price they’re looking for, they will answer with vacuities such as “That depends.” Then silence. The result in the first instance (misleading) is that they end up with things they don’t want. In the second (stonewalling), if they reach any deal at all, it will be of low value, since they never asked for what they wanted.

Negotiating is an attempt to reach a mutually rewarding arrangement that maximizes your goals. You can rarely attain a goal by aiming in the opposite direction or by refusing to aim at all. Whether you need delivery by a certain date, want to keep a house purchase within a set budget, or would prefer to settle a dispute out of court, you will get the results you are after most reliably and efficiently by first asserting what it is that you want. Saying otherwise will just send the negotiation on an unproductive path.