Consider your Opening Statement in a Negotiation

You will not find me complimenting politicians on their negotiating skills very often, but the recent negotiations between the Conservative party and the Liberal Democrats were interesting and I propose coming back to them from time to time during the next month. For now, I want to consider the "opening salvo" on 7 May 2010, the day after the UK General Election.

For those who do not follow politics in the UK, the country woke up to the first "hung" or balanced parliament (it depends on your political persuasion which adjective you will want to use!) for thirty years and, for a short while, there was relative silence from our politicians. There were those who argued that this was a blessed relief after four weeks of relentless campaigning, but in truth, moves needed to be made in order to form as stable a government as was possible under the circumstances.

Nick Clegg, the leader of the Liberal Democrats, had made it clear that, in the first instance, his party would have talks with the party that had won most seats in the General Election and, for the first time since 1997, the Conservatives were in that position.

David Cameron, the leader of the Conservative party, moved to seize the political and negotiating initiative by holding a press conference - a conference at which, significantly, he took no questions. He wanted his message to stand as delivered; he wanted there to be no possibility of a muffled soundbite in answer to a throwaway question; he wanted to appear in control and statesmanlike. His statement was therefore prepared in advance, rehearsed and delivered without falter.

Whether you agree or not with the Conservative party's policies is not the issue here; I believe that there are lessons for the commercial or indeed HR negotiator to be learned by studying his speech. Yes, it was delivered to the British people live on national television, but in reality, it was aimed at the leadership of the Liberal Democrats and them alone. It was, in effect, an opening statement in which he did a number of things very effectively.

• He set out and described the background to the negotiations
• He outlined clearly what his objective was - "Britain needs strong decisive government..."
• He set an agenda for the talks and, in so doing structured the Liberal Democrats expectations with this key phrase - "it is reasonable to expect that the bulk of the policies in our (the Conservatives) manifesto should be implemented..."
• He made it clear what the Conservatives "must achieves" were, but also offered olive branches to the Liberal Democrats on their important issues
• He kept his own constituents on message by outlining to them exactly where there would be no negotiation on principle
• He set the tone for future meetings in the style of his presentation.

Negotiators should think about how they open their meetings. It is a critical time in any negotiation and a rehearsed opening statement can set the tone and background to the negotiating process. Your rehearsed statement should not just be tried out on the mirror - try it out on your colleagues first. They will soon tell you how good or bad it is!

Repent at Leisure...!

On 28 May 2010, an article appeared in the UK’s Independent newspaper linking the current England football manager, Fabio Capello, with the manager’s job at the Italian club, Inter Milan. Capello’s response to this story was interesting: he “distanced himself” from the job.

Note that response! He did not categorically deny interest or say that he was fully committed to the England job; he “distanced himself”. From the club’s perspective, I imagine that the Inter Milan president, Massimo Moratti, probably took heart from the gentle signal that Capello had not ruled things out altogether, but from the English FA’s perspective, this was a new and unwelcome development on the eve of the South African World Cup.

Three days later, another of the English broadsheet papers, this time the Daily Telegraph no less, breathlessly headlined that Moratti “hopes to prise Fabio Capello from his England contract”. This and other stories put the Football Association under pressure to reopen discussions. So what happened?

Well – first some more background. Capello’s ex-boss, Lord Triesman had unexpectedly resigned as Chairman of the Football Association on 16 May; prior to his resignation, he and Capello had apparently shaken hands on a reworked contract that removed one important clause. In the original version, both parties had the right to “review” Capello’s position at the end of the World Cup; this clause had been removed and thus protected Capello in the event of a poor performance in South Africa. Between Triesman’s resignation and prior to the Inter Milan interest, the FA had refused to be drawn on Capello’s contractual terms, but their hand was forced by these developments and they had to come to the table.

Successful talks were concluded and the Daily Mail was able to announce on 2 June that discussions between Pierfilippo Capello (Fabio’s son and lawyer) and the FA represented by new President, Sir David Richards and managing director, Adrian Bevington had included the removal of the review clause.

Fast forward with me now to the Daily Telegraph of 28 June. England, after a lacklustre performance in the group stages of the competition, had just lost to its old footballing enemy, Germany in the first knock-out round and crashed out of the competition, losing 4-1 in the process. “Fabio Capello will meet senior Football Association officials on Monday,” the Telegraph announced, “to seek reassurances over his future, signalling the start of negotiations that could end in his departure as England coach.” Later on in the same article, the paper reports that “he (Capello) made it clear that he had no intention of resigning without compensation for the remaining two years of his £6 million-a-year contract.”

Should the Football Association have been drawn into negotiations with Capello’s people when they were?
Should Capello have exploited his new-found power in the way that he did with the World Cup only days away?
Did the negotiations take Capello’s eye off the World Cup ball?

Well, it is easy to be wise after the event and hindsight is an exact science. I am not going to comment on England’s World Cup performance, as that is beyond the scope of a negotiating blog, but in terms of the negotiator, there are a number of interesting questions and lessons from the episode.
• Never underestimate your power in a negotiating situation and recognise that external developments can alter the power balance.
• Be prepared to exploit these external developments if they strengthen your position.
• Occasionally, it might be in your interests to be economical with the truth! Signalling outright rejection of the Inter Milan interest would have seriously weakened Capello’s negotiating position.
• Be clear about your objectives; focus on them and do not be scared to ask for what you want.
• Time – especially as deadlines approach – can be a valuable reminder to the other side that there might be risks in not making concessions.
• From the FA’s position, mind you, they might argue that they acted in haste and will be repenting leisurely and at great expense!

Dramatic Negotiations!

I was intrigued by a report on the front page of the Times on Thursday 24 June under the heading “Obama takes command”. The report reads, "a dramatic morning of negotiations at the White House culminated in an address to the nation in which Mr Obama insisted that the change (the replacement of General McChrystal by General Petraeus) was one of 'personnel, not policy' but warned: 'I welcome debate among my team, but I won’t tolerate division'”.

Now, negotiation is a means of resolving conflict by a process of give and take – in other words, it is a trading process. I am wondering just exactly what the “dramatic negotiations” were in the meeting between McChrystal and his Commander-in-Chief? I imagine that the meeting went something along the following lines:

General McChrystal: “Sorry Chief.”

President Obama: “Thank you. I accept your apology. You’re sacked.”

Obviously, I’m simplifying things here slightly, but in a nutshell, that is what is reported to have happened.

Perhaps the negotiations were between Obama and Petraeus? Not according to the good General who is reported as saying that he accepted the post without preconditions. He is reported to have opined that you don’t present ultimatums to your Commander-in-Chief.

Maybe, the President was discussing McChrystal’s pension arrangements with him. He needn’t worry. If Tony Blair can earn hundreds of thousands of dollars on the US lecture circuit, General McChrystal’s future would seem to be secure for the time being at least.

The morals of the tale are these

• You can only negotiate if you have power.
• And if you have absolute power, you don’t need to.

When to go “public” in a negotiation

The BBC, it seems, has entered a new age of realism when it comes to the rewards that it offers “talent”. It was only relatively recently that Jonathan Ross’s agent was able to secure an annual remuneration package rumoured to be in excess of £6m. How times have changed! Christine Bleakley, one of the presenters on the popular tea-time magazine programme, The One Show, has had her offer of £450,000 summarily withdrawn by the corporation. It was felt that she had dragged out negotiations to push up their offer.

Was the BBC right in announcing the withdrawal so publicly? The answer, I suppose, is that it depends what their objective had become at the time of the withdrawal. Two possible scenarios to ponder:
• The corporation wanted to force Bleakley’s hand and have her accept their offer. I cannot believe that this was the case, but the risk in so doing becomes immediately evident. She has accepted a much higher bid (rumoured to be £1.5m per year) and has flown to the opposition, in this case, ITV, where she will become a presenter on breakfast time TV with her erstwhile One Show co-presenter, Adrian Chiles.
• The corporation had genuinely gone as far as it was prepared to go with Bleakley and was anxious to send out a message to other presenters that there was no bottomless pit and that, if necessary, it was prepared to lose talent rather than be held to ransom. I believe this second option to be the truth of the matter.

There are a couple of lessons from this that negotiators might like to ponder.
• Know your limits and do not be scared to walk from a potential deal if these have been breached.
• If you have identified something as a point of principle or a point beyond which you will not go (but be careful to test that position first), then make it clear to the other side that you will not move – and don’t move!
• Only go public in a negotiation if you feel that by so doing you will help structure people’s expectations – either the other side’s or, as in this case, people or organisations with whom you may need to negotiate in the future.

One other point worth making: note that the BBC got its retaliation in first and was responsible for making the story public. They were able to put their side of the story, to control the release of the news and show themselves in a good light.

When to close the deal!

It is as if it were yesterday and I can see their faces yet – stern, unbending, implacable. The setting was innocuous enough – a small meeting room in the hotel for which I was Sales Director. On one side of the table, I sat with the General Manager and on the other were two senior managers of a large computer company whose main European plant was situated twenty miles down the road.

“Free wine for the top table,” he asked. “It’s not a lot to ask given the size of the conference,” and in truth, he was right. 50 delegates; five nights over a winter weekend, when otherwise the hotel would be empty; good spend over the bars from a team of salespeople intent on renewing old acquaintances and having a good time – this was an important piece of business for a city centre hotel that had difficulty filling its bedrooms over a weekend, so we were keen to win it.

But I do remember at the time thinking that it was a bizarre question to be asking. It seemed to me that we still had lots to talk about, and there were key issues yet to be agreed. Quick as a flash though, I replied that free wine would be fine. This was an important gesture to my way of thinking; I was keen to win the customer over and here was a carrot that would improve our relationship and enable us to show willing. “Not a problem,” I continued, thinking to myself that we could well afford four bottles of house white and four of house red.

The meeting continued and further discounts on the conference rate were agreed before the next, seemingly silly question was asked. This time, they wondered whether we could arrange for two complimentary room upgrades. Each of them wanted a private sitting room, so that they could do some entertaining. Further, they suggested that we stock the two rooms with drinks “at off-sale prices” instead of the hotel rates. Before a breath could be taken, my colleague agreed to both. I could see from where he was coming – both of these concessions were relatively cheap for us to concede and again, they demonstrated our willingness to be flexible and keenness to win the deal.

The meeting continued; more requests for small favours from them and more concessions from us. Eventually the deal was done and we toasted each other’s health (this was the 1980’s after all!) with a couple of large gins and tonic. All was well with our world and all was well with theirs – well – so we thought. It turned out that there were another couple of issues that we needed to clear up (in their direction, not ours!), but once those were done and dusted, the conference went ahead.

And then came the gala dinner – well, the morning after to be exact. At the morning meeting, the general manager and I were accosted by the food and beverage manager. “What was with the cases of Chablis and Chateauneuf du Pape?” My colleague and I looked at each other. “He told me,” continued the food and beverage manager, by this time in the full flow of a righteous and growing indignation, “that you had offered a case of Chablis and a case of Chateauneuf du Pape for the gala dinner!”

To be fair, we never had, but nor had we confirmed exactly what it was that we had offered, so again we chose not to ruffle the feathers of the organiser at the end of a profitable conference and let it slip through unchallenged.

All of this had slipped my mind until I arrived on a Scotwork advanced negotiating skills course and listened to the tutor talk about closing the deal and agreeing things before the end of the negotiation. Gradually it all came back to me.
• I remembered being surprised by the strange question about the free wine when we still had items to discuss. I now recognise that the most common closing opportunity that you will ever get is when the other side start asking about details. Your response to those kinds of questions should test whether the rest of the deal on the table is acceptable, assuming you make that final concession. If you fail to spot what’s happening, the negotiation can continue – as happened – and you can end up making further unnecessary concessions later in the game.
• The room upgrade was another missed closing opportunity but in addition, we failed to value the concession (which cost us nothing) in their terms. Perhaps we could have gone to our wish list and exchanged early staged payments or a letter of referral in return for the concession (as well, obviously as the close).
• Our failure to confirm the exact details of the concessions made on the gala dinner wine resulted in our taking another hit to the bottom line; the moral of that particular tale is always to ensure that you agree what you have agreed and confirm the agreement. We did not have email in those days; think about sending them a quick summary of the deal by email – it makes “deal creep” less likely.

Negotiators ignore the final stages of a negotiation at their peril. Late and sometimes expensive concessions go straight to the bottom line and will have an adverse effect on the profitability of your final agreement.