Thursday, December 01, 2005

Negotiation - Listening

I am modestly surprised at how consistently I still run across people in love with the sound of their own voice, who don’t pay enough attention to what others in the room are saying. For me, I’d guess that in a typical two-person business negotiation I do no more than 30-35% of the talking. I really prefer to listen, ask follow-up questions and keep the other side talking. I find this tremendously helpful in what I do, yet I still feel like listening is underappreciated as a negotiating tool.

I find two primary benefits to listening during a negotiation, but they can require different ways to focus the listening. The first is the easy one – listening to the other side’s point of view allows you to craft more creative solutions to their business problem that also work for you (the cliché “win-win” outcome), or more articulate and forceful arguments about why their positions are wrong or won’t work. Understanding what is really driving the people on the other side of the table is tremendously helpful. I don't mean understanding their negotiating positions - those are always right out in the open. I'm talking about the reasons why they are taking those positions, which often can only be gotten to via active listening and follow-up questions. Perhaps the other side has already received BOD approval to do the deal at a certain price, but will need to go back through the approval process to change the terms. Maybe the CEO got burned investing in his brother-in-law’s car dealership 20 years ago, and now the company insists on overreaching apportionment of liability. There's no end to the factors that can drive the positions we take in negotiation, but by actively listening (not just nodding your head robotically while mentally rehearsing your witty rejoinder) and asking probing questions, you can ferret these issues out and work on the solution to the real problem at hand.

The second benefit to listening, which can be harder to focus on because it seems inefficient, is what I call the “day in court” phenomenon. Some negotiators just need to be heard. It can be their egos, a need to be able to return to their senior management and truthfully report that they explained all of their positions to a receptive audience (an audience which still, incidentally, said “no”), or just a need to vent. But it can be hard to fight the urge to cut someone off. You’ll find yourself in a negotiation, and you know precisely what the other guy is going to say. You’re a smart fellow with lots of good uses for his time, so you cut in mid-sentence and say “no.” No question there are times, particularly in lengthy M&A negotiations, when you need to do this. But if it is your primary style you will come across as insufferably arrogant. That doesn’t make it easy to do business. Unless the other side has no leverage whatsover (and sometimes even then), bullying only makes them dig in. On important issues – even when I know without a doubt that I am going to reject the argument that is being spun to me – I will hear the person out, and perhaps even ask a follow-up question or two. It shows respect and indicates a consideration of the opposing point of view. The person I'm negotiating with can then accede to my point without feeling like they are knuckling under - and believe me, considerations of ego and face-saving are alive and well in American business negotiations. Furthermore, I have consistently found that opponents will treat my positions with greater deference if they feel I have fully considered theirs in reaching my conclusion.

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