Fundamental Steps to Negotiating Successfully Globally

Cover of book entitled
Getting to Yes. Photo Credit: pshegubj

In today’s interconnected global environment, business people who understand cultural differences and how to communicate effectively have a decided competitive edge. But do you know the basics on how to negotiate effectively whether you find yourself in China, Ireland or Argentina? In this article, I discuss five fundamental steps to negotiating successfully on a global basis.

Few subjects are as critical or as complex as negotiating across borders.

Cross-cultural literacy is vital to international business success. It starts with a global mindset and continues with what might be described as a culturally sensitive mindset in international negotiations. No matter how you define it, one has to achieve heightened awareness to negotiate a deal, resolve a dispute and make decisions with people from different cultures. So how do you reach agreement about how you are going to work together in the future should you have conflicting goals? Consider it Negotiating 101.

1.  Know the parties you are negotiating with. Do your homework. Are the people who will be at the table or on a Skype call representing their own self-interests with only limited authority to share information and make decisions? Or is the participant a lead person who has the authority and responsibility to make decisions on behalf of the company? Oftentimes, companies send intermediary agents or messengers on a fishing trip.

After identifying the parties involved, you can move on to the issues.

2.  Define your and your counterpart’s issues. This can be done by simply having a pre-meeting with a key person to talk about things, build the relationship and determine a what-are-we-missing type of approach to the get the issues out front and center and open for honest discussion.

 

3.  Understand the difference between an issue and a position. Most people go into a negotiation with a position, what a negotiator wants with respect to an issue. Don’t. Focus on mutual best interests, which are the needs, motivations, concerns and goals that underlie positions. One of my favorite classic books on negotiating is “Getting to Yes” (pictured) by William Ury and Roger Fisher. They talk about the importance of focusing on interests versus positions when negotiating because with interests, you have a softer or more flexible goal – oftentimes even converting what might seem like a conflict into no conflict just because of the change in focus.

4.  Establish an alternative to a negotiated agreement. Many people approach this by asking themselves “what’s the one thing I won’t settle for, do or accept?” and than when negotiations go South, they cave because the counterpart has hit that weak spot. Some people call this the walk-away or bottom line point on a negotiation. For example, you might be interested in selling your company to an overseas firm and will only accept an all-cash offer for what your company is worth. Your counterpart comes to you with a 1/3 cash down, 1/3 equivalent in stock and 1/3 to paid out over a three-year timeframe – all adding up to what your company is worth and then some.

You focus on your position, and the deal is dead. If you focus on mutual best interests and an alternative in the back of your mind, the negotiation might have a chance. Set up a reasonable alternative – one you can live with and that meets your interests and priorities.

5.  Set a target. Just like when you are driving, you need an idea of where you are going (called a roadmap), when you negotiate a deal, you must set a target. It’s what you reasonably think is possible to get in a negotiation. Be realistic and not pie-eyed. Be generous and optimistic but also remember to remain rational. Ask yourself: Is this the best I can do given the industry, the current market, and environment? If so, proceed cautiously. One area of caution: Don’t lose sight of your target as soon as your counterpart gives you an offer that beats your alternative negotiated agreement!

 

Strong relationships between parties in a negotiation have long-term payoffs. Whether located in China, Ireland or Argentina, get to know people – that’s the key to negotiating successful agreements.