How to Negotiate

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September 30, 2005

Problem Solving Skills and Negotiation

No one can negotiate until they understand the situation. Basically there is a problem to be solved that involves getting two or more people to agree on something. Basic problem solving is part of the skill set of any effect negotiator.

Defining a problem is critical. Often people fight over ancillary issues rather than the real problem. In a mediation the mediator takes the time to source, identify and quantify all the micro issues that create the underpinnings of the primary argument. Mediators are trained to resolve the ancillary issues so that the primary problem can be resolved.

Problem Identification Tips:

- Don't accept the obvious; seek out underlying issues or other problems. Often the other person or the parties may be unaware of the impact of these 'lesser' issues.

- Prioritize the issues and seek to resolve the minor ones first. This will create a more positive environment and may help lead to a global agreement.

- Seek to put emotional reactions in perspective. If you can diffuse any prevailing anger or distrust, you will have made a major advance toward reaching an agreement.

- Separate the "wants" from the "needs" and focus on satisfying the "needs" of each party. Often it is the "wants" that create the most separation. And they are the least important aspect of the problem once they are properly identified as "wants".

- Don't ignore or dismiss emotional needs or wants. Sometimes their satisfaction is more important to one of the parties than the monetary aspects of the situation.

Problem identification does not stop when you enter the fray. Listen carefully to what the other person is saying to identify additional irritants or issues. Listen for clues on how to satisfy a specific need using alternative consideration.

Problem solving is the meat of dispute resolution. By expanding the possible settlement options the mediator is seeking to solve the dispute by pairing unlikely party commodities so that both emerge feeling a sense of victory. Win/Win negotiating is not so much about appeasing both sides as it is about pairing needs and satisfiers so that both parties come away with more than they gave away in their minds.

Posted by Bill at 11:03 AM | Comments (1)

September 28, 2005

Debt Restructuring Before Buying a New Home

The most important aspect of personal debt restructuring is to ask before you get in too deep and before they start chasing you to pay.

Nell Henderson, Washington Post Staff Writer, Tuesday, September 27, 2005 wrote an article, "Concerns Raised as Home Sales, Prices Rise Again". In the article he notes concerns about the high cost of real estate and the risk lenders are taking by granting creative financing to facilitate sales at such elevated prices. "One driver behind price appreciation, Greenspan said, is the popularity of new types of mortgages that enable many borrowers to buy houses at prices they could otherwise not afford -- and that may be hard for some borrowers to repay if interest rates rise and home prices stabilize or fall.".

The temptation of getting into the runaway housing market is understandable. Simple savings accounts are returning less than 2% per year. CDs and bonds are not much better. "Safe" funds are yielding 5% pre-tax. And real estate is surging, offering both equity appreciation and tax protection. However, if you are in debt, it's important to make sure you restructure it and consolidate it before taking the leap into the housing market.

So many see the risk of taking on a house that is beyond their means as worth taking in order to create value and build a financially secure future. The problem is that the lenders, once predominantly banks prone to conservative lending standards, now include pension funds, insurance companies and other investment entities eager to place loans to keep their money working. It is not the lenders who will be hurt. It is the borrower who gets burned. Bankruptcy laws are changing in October and it will no longer be convenient to file bankruptcy to avoid creditors. Individuals, once protected from forced liquidations, will find that to be the norm rather than the exception. So it is more important than ever to learn how to renegotiate or restructure debt before one is forced into bankruptcy court.

Renegotiating debt is best done before you are too delinquent. With a solid payment history with your lenders you are more likely to find them willing to work with you when you approach them. Debt can be restructured a number of ways but there are some cardinal rules to observe so that you preserve your ability to control the restructuring of your debt.

-Do not wait until the debt has been turned over to a collection agency. By then it is too late to deal with the original issuers of the debt who might have an interest in helping you. They have discounted and sold off your debt when it is turned over to collections. That means they have written off what they would have conceded to you to a third party. The third party's only motivation is to make money off your bad situation.

-Before you seek debt relief, develop a personal budget that is viable and a plan which you can handle. Now you are ready to lift the telephone and call for help.

-Don't be afraid to ask for help. Advising the lender of a looming problem allows them to help you avoid it becoming a major issue.

-Be persistent. "No" is easy for creditors to say. You will hear it a lot. Call back and try to get to someone else. Talk to the same person repeatedly until they begin to get to know you and start wanting to help you.

-Be pleasant. You need to develop a rapport with the other person so they want to help you. Getting mad often makes things worse.
Debt restructuring is a basic form of negotiation. You have a need.

The lender also has a need. You have a solution to offer. They have to be convinced to listen to you. You have to convince them of your sincerity and why they should gamble with your plan. Don't ask for a hand out. Ask for approval of a specific plan.

A plan that works for you should give them something as well. The two primary commodities are time, money and your credit rating.

-If you have money, but not enough, explain your situation and offer to pay off the debt at a discount. If they sell off your debt they will be lucky to get 50 cents on the dollar. Obviously you should be able to settle between 50% and 100%.

-If you offer to pay the full amount, but over time, you will be saving a lot in money and keep you credit rating from being impacted.

-Be sure to negotiate the interest. It does you no good to extend your payment period if you are also going to be paying a higher interest rate. Interest rates are negotiable.

-Finally, require that the lender not place this delinquency or restructuring of the loan on your credit report.

The most important aspect of personal debt restructuring is to ask before you get in too deep and before they start chasing you to pay. A good customer's case always sounds better than a plea from a habitual problem customer.

By successfully restructuring your debt you will have protected your credit rating for forays into the housing market.

Posted by Bill at 12:41 PM | Comments (0)

September 18, 2005

Iran's Stalling Tactic May Have Backfired

Dafna Linzer of the Washington Post on Monday, September 19, 2005 wrote an article, "Iran's President Does What U.S. Diplomacy Could Not" showing how Iran's new president bought his country some time. She wrote, "Facing mounting criticism after walking away from negotiations with Europe and restarting part of Iran's nuclear program, Mahmoud Ahmadinejad asked the world to withhold diplomatic pressure while he put together new proposals."">Iran's President Does What U.S. Diplomacy Could Not" showing how Iran's new president bought his country some time. She wrote, "Facing mounting criticism after walking away from negotiations with Europe and restarting part of Iran's nuclear program, Mahmoud Ahmadinejad asked the world to withhold diplomatic pressure while he put together new proposals."
We live in a fast-paced society. Between faxes, email, pagers and mobile telephones, there is precious little time taken to reflect on the negotiation once it begins. But the pace of the discussions is something that you can and should manage. Just because the other party is in a hurry is no reason for you to rush a response or even respond. Take your time, assess your options, and set your strategy carefully. Then respond. You gain power and authority by setting the pace of the negotiations.

Keeping the other person in the dark can also be useful. When you use delay as a tactic, you do not need to tell everyone. Sometimes the unknown can forestall an action that jeopardizes your position while you regain your composure. When you are fully prepared, go on the offensive.

Linzer postulates that when the Iranian president contined, "Ahmadinejad appeared to threaten as much when he warned from the General Assembly podium that in the face of U.S. provocation, 'we will reconsider our entire approach to the nuclear issue'."

But such tactics can backfire. "The effect of that speech will likely be a toughening of the international response to Iran because it was seen by so many countries as overly harsh, negative and uncompromising," Undersecretary of State R. Nicholas Burns said in an interview Sunday. "The strategic aim of a great many countries is to see Iran suspend its nuclear program and return to peaceful negotiations with the Europeans."

Posted by Bill at 08:00 PM | Comments (0)

Is an Enemy Required in a Negotiation?

In the September 17, 2005 edition of the Epoch Times there is an article about Sino-U.S. relations, the Storm Clouds That Cancelled the Sino-U.S. Summit Were Not from Katrina, by He Qinglian. In that article he explains the need for an adversarial relationship between the U.S. and China. “China’s ever-growing military power requires that China have an “enemy” so that the military can greatly enhance its political status and increase its budget.”

The Chinese government appears to need to make an enemy of the U.S. to keep control of its population. In normal life we tend to make our opponents our enemies. This is usually not the case. They just want something different than we do. Like the opportunity to make a profit or to win a point. An enemy is out to do you physical or fiscal harm. In most business negotiations that is not the intent of the parties. Divorce settlements may be different. The parties want to do damage!

It is not always productive to view your opponent as an enemy. One makes enemies and friends through their actions. Both your enemies and friends will talk behind your back. Realize just as you seek background information on others before a meeting, they will likely do the same. If the feedback they get about you is too adverse, you may never be able to have an open, productive dialogue.

Dangers of being viewed as an Enemy:

-You may be prejudged.

-You may lose opportunities if viewed as an enemy or staunch adversary.

-You may have to overcome fear and hostility from a perfect stranger.

-It will take twice the effort to convert that enemy to be a friendly associate.

He Qinglian goes on to say, “A short while ago, General Zhu Chenghu announced the intention of using nuclear weapons against the U.S. The explanation offered by the Chinese government, that Zhu’s speech only expressed his own personal opinions and does not represent the Chinese military, is not convincing. Looking at the changes in the relationship between the two countries, whether a state of military neutrality will last depends on whether or not the Chinese civil system is strong enough to manage the military.”

Beware of letting your prejudice block your ability to negotiate. Yes, you have to watch your enemies to see the strike coming before it hits; forewarned is forearmed. Don’t let an impression of your enemy hinder communications. Through a dialogue you may find he is not the enemy but a potential ally.

Posted by Bill at 10:28 AM | Comments (0)

September 15, 2005

Iranian President Mahmoud Ahmadinejad Does Little to Advance Negotiations

Visiting Washington this week Iranian President Mahmoud Ahmadinejad introduced himself to the U.S. media showing defiance at U.S. charges over Iran's nuclear program. Ahmadinejad went on to address the subject of Katrina and poke at the Bush administration's response. He compared the delivery of aid to victims in the Gulf Coast unfavorably with the response to natural disasters in the Islamic republic.

Whether you are negotiating, telling a joke or simply discussing a topic, you are partially responsible to make sure others are listening. The best way to stymie communication is to:

-Irritate the other person so he or she stops listening.
- Pepper your comments with blatant falsehoods.
- Intentionally put the other person on the defensive.
- Seek to raise issues that are sure to bring stress to the conversation.

Some people enter a negotiation with the intent to demonstrate their power and control. Unfortunately, in doing so they may actually undermine any chance of reaching an accord. But if your intent is not to negotiate at the moment, then such behavior becomes a justified stalling tactic.

Continuing he added, "We thought Americans would act more quickly and help their fellow Americans. We expected more." He added: "During the very first day of the hurricane, people could have brought more and limited the extent of the tragedy."

Ahmadinejad obviously has no intent of negotiating with the US about Iran’s nuclear program. His style and remarks are designed to thwart any productive conversation. Knowing that we are embroiled in Iraq and distracted by Katrina, this is a logical posture for him to take. He has little to lose and much to gain by pressing forward.

Read the news article "Iran's Leader Critical in First US Visit," by Glenn Kessler (at the UN) - the Washington Post, 16 Sept 2005 (registration required)

Posted by Bill at 07:45 PM | Comments (0)

September 11, 2005

Credit Card Debt Negotiation

There are big changes in the bankruptcy law coming in October 2005 according to Attorney Albin Renauer. He suggests if you're thinking of filing for bankruptcy, do it now. It will be much harder to qualify after October 17th. The credit card industry has finally gotten the bankruptcy law "reform" changes they've been lobbying for. Signed into law on April 20, 2005, the new law will take effect on October 17, 2005. It has significant impact on consumer debt and offers fewer protections from collection efforts than the prior law.

America is swimming in debt. Credit card debt, mortgage debt, car loans, variable mortgages, lines of credit, consumer debt, business leveraging, corporate debt, and state and federal debt. It all adds up to the fact that we are living beyond our means. When there is a disruption in our income, that debt which was once a means of living the good life becomes the albatross that threatens the ship. Love it or hate it, we seem to be a society that has to have it.

What can you do about personal debt when it becomes too much to handle? A lot.

Debt can be restructured a number of ways but there are some cardinal rules to observe so that you preserve your ability to control the restructuring of your debt.

1. Never wait until the debt has been turned over to a collection agency. By then it is too late to deal with the original issuers of the debt who might have an interest in helping you. They have discounted and sold off your debt when it is turned over to collections. That means they have written off what they would have conceded to you to a third party. The third party's only motivation is to make money off your bad situation. You are now truly dealing with the devil!

2. Before you seek debt relief, develop a personal budget that is viable and a plan which you can handle. Now you are ready to lift the telephone and call for help.

3. Don't be afraid to ask for help. Advising the lender of a looming problem allows them to help you avoid it becoming a major issue. Trying to avoid the lender only puts you on the defensive with nowhere to go.

4. Seek to be transferred as high in the organization as you can. You want to be at a level where the person is allowed to think and has the authority to grant you a concession or revised payment schedule.

5. Be persistent. No is easy to say. You will hear it a lot. Call back and try to get to someone else. Talk to the same person repeatedly until they begin to get to know you and start wanting to help you.

6. Be pleasant. You need to develop a rapport with the other person so they want to help you. Getting mad only seals your fate.

Credit card debt restructuring is basic negotiations. You have a need. You have a solution to offer. The lender also has a need. They have to be convinced to listen to you. You have to convince them of your sincerity and why they should consider your plan. Don't ask for a handout. Ask for approval of a specific plan. A plan that works for you and gives them something they can accept. The two primary commodities are time and money. If you have money, but not enough, explain your situation and offer to pay off the debt at a discount. 30% to 40% is not an unusual discount. If they sell off your debt they will be lucky to get 50 cents on the dollar. If you offer to pay the full amount, but over time, interest free, you will be saving a lot in money and keep you credit rating from being impacted.

The most important aspect of personal credit card debt restructuring is to ask before you get in too deep. And ask before they start chasing you to pay. A good customer's case always sounds better than a plea from a habitual problem customer.

Posted by Bill at 06:40 PM | Comments (1)

September 10, 2005

Team Negotiations

Federal Emergency Management Agency Director Michael Brown was recalled to Washington to oversee national hurricane Katrina relief efforts. His replacement is Coast Guard Vice Adm. Thad W. Allen, who was overseeing New Orleans relief and rescue efforts.

Team negotiations are often essential in today's business environment. They function like any other team and become dynamic entities in their own rights. By expanding a group, additional talents and perspectives are added. Additional members also increase communications and focus challenges. This can be beneficial to the process, or detrimental.

Like any other aspect of negotiations or management, teams need to be well managed.

If you are heading a negotiating team, you need to manage the people on your team. Even if they are "professionals" you are responsible for their preparation, research, and the role they will play. This is especially important if they are "professionals". Too often clients delegate the preparation and research aspects of a settlement conference to their legal staff. This would be fine if the issues were going to be resolved by simply applying legal principles. When it comes to other issues and overall strategy, the responsibility is ultimately vested solely with the lead negotiator. You need to insure that everyone on your team knows their role, is prepared, and most importantly, that you have set the global strategy for the session and the parameters for settlement.

If you find you have a weak team member, replace that person quickly. If they have been engaged in the fray, do so in a fashion that does not impair the progress you have made. Negotiations is little more than small group management.

In the case of Michael Brown, he had to be removed because he had become a liability. Michael Chertoff tried to smooth over the impact of his removal by saying it was part of a larger need: "The effort to respond and recover from hurricane Katrina is moving forward. We are preparing to move from the immediate emergency response phase to the next phase of operations," Chertoff said during a press conference. "Importantly, we must have seamless interaction with military forces as we move forward with our critical work in New Orleans and the surrounding parishes. At the same time, we are still in hurricane season and need to be prepared to deal effectively with the possibility of future hurricanes and other disasters."

Posted by Bill at 08:41 AM | Comments (0)

September 08, 2005

Negotiation Barriers

An anonymous complaint is filed against Deputy Chief Brenda Johnson, the lead character on the new TNT series The Closer, while she is busy investigating the murder of a Hollywood producer. The investigation threatens to jeopardize her career. Rather than take the easy way out by pretending to be contrite to stop the investigation, Brenda focuses on breaking the case. Her squad members, knowing of the pending investigation, work behind her back to thwart the unfounded case against her.

Negotiators are human. They are subject to being distracted by personal problems, other matters and even exhaustion. To a lesser extent, they can be distracted by delays in a meeting, antagonistic behaviour of someone in the room, or even by the light coming in through the window.

Being comfortable is an essential ingredient to being effective as a negotiator or mediator. Before entering a settlement conference put aside you personal issues and clear your mind. If the other issues are such that you can't do this, don't start the negotiation. Ask for a postponement or send someone else. You need to have all of you faculties focused to do the job properly. Such distractions are barriers or obstacles that stand in the way of a successful negotiation. Better put, barriers are obstacles to effective communications.

In order to have an effective discussion, the people party to the discussion have to be able to hear, be heard, and understand each other. If you sense the other person is distracted, make it your responsibility to expose the cause. If it is going to impede the other person from listening or focusing on what you are saying, you may want to suggest postponing the meeting. If you feel it will cause the other person to rush through the meeting and grant concessions to wrap things up, then it may be advantageous to proceed. Until you know the situation, you can't judge what the impact will be on the negotiations.

You may actually want to call their attention to the fact that they weren't listening and ask them why. While this second tactic may seem rude, it can often uncover the reason for the barrier that can then be removed. For example, I recall a situation where the other person replied, "I'm really sorry, my daughter is very sick and I'm distracted." To this I said that I was sorry to hear about her daughter and we put off further discussions until the personal problem was resolved. In understanding her personal need, we dealt with each other as real people. This helped us to overcome some of the tougher issues we were facing as we had built up a level of trust and respect. The point is that unless communications are being heard, they should be forestalled until the other person is ready or capable of hearing what you have to say.

The mere act of acknowledging barriers to communications can give you the opportunity to work together to start to agree on how to resolve the barriers. Then it will be easier to discuss and resolve the real issues.

By the end of The Closer, Deputy Chief Johnson's staff had demonstrated to her and to the LAPD that she was finally accepted. This will change for the better how they function as a team.

Posted by Bill at 07:42 AM | Comments (0)

September 05, 2005

Crisis Management

Katrina has thrown America a major curve. After weathering the storm everyone exhaled. Then, the following day, the levies gave way and havoc erupted. The ensuing crisis has focused the attention of the world on America’s ability to handle the situation.

Having good crisis management skills is an essential characteristic of an effective negotiator. No matter how well-prepared, how you have planned, or how ready you are for a negotiation, the unknown can always through a curve into the process. How the unexpected is handled often determines the outcome of a negotiation.

Managing a crisis requires:

• Understanding your own strengths and capabilities.
• Knowing where the high ground is and how to get there.
• Being able to gain the confidence of others and lead them to safety.
• Having the strength to weather the store and make the trek.
• Caring enough to make the effort to prevail.
• Taking action and following through to complete the task.

In negotiations when your final overtures are thwarted or an agreement made is broken at the last minute presents a crisis situation. Times like these require regrouping, on-the-fly assessment of options, and concise decision-making. Only good preparation and a strong knowledge base will prepare you to step into the breach and save the day. Whether you do it is up to you. It takes confidence, conviction and a passion to prevail.

Michael Chertoff, the Homeland Security and FEMA, Governor Kathleen Babineaux Blanco, Army Lt. Gen. Russel Honore, New Orleans Mayor Ray Nagin and everyone else involved on the ground and in the chain of command have had to cope with correcting a problem that emerged from what initially was thought to have been a near miss. How they handle the situation on a go-forward basis is far more important that understanding how it happened. That will come later. In a crisis you look forward, make a plan, and attack the plan. You can look back later. What is essential is that the victims are attended to, the areas impacted are stabilized, and rebuilding is not only started but completed.

Posted by Bill at 09:50 AM | Comments (0)