Change Work February 2016

A fair deal

The need to negotiate comes up all the time, not just in business or politics. Everywhere, from in-family arrangements (who's cooking / washing up / driving the kids to parties) to buying a car or changing jobs, you are likely to get into a negotiation. You may not always realise you're doing it but you are, and it really helps to be good at it.

Having said that, I find that the best lessons come from the field of industrial relations. They might seem remote from everyday, personal disputes but the principles they illustrate are universal in application.

For example, some years ago there was a public sector organisation whose new boss approached the annual pay negotiations with a determination to conclude them quickly. He didn't want to engage in a lengthy process of edging towards a settlement so he decided to state his "final" position right at the start. He offered a 5% increase and said that the union representatives might as well accept it there and then because he couldn't afford a penny more.

What a bold, honest approach!

Unfortunately for the management, the union side was led by experienced negotiators who had a clear strategy. Part of this was to have a planned fall-back position - the least they could accept if things went badly - that they would not reveal. And their fall-back was 4.5%.

"Great! We've got more than we set out for - job done. Let's all go to the pub and celebrate." But no. Playing to the long-established rules of the game, what they actually said to themselves was, "If he's offering 5% at the start, there must be more available." So they rejected the offer and stuck out for more.

Management then made the fatal mistake of increasing their offer - which was also rejected. This process continued, ratcheting up the offer on the table to 10% - more than double the union's fall-back figure. But far from accepting this unexpectedly generous amount, they called a work-to rule and, sure enough, the action succeeded in squeezing out an extra half percent.

So, rather than achieving an amicable settlement very close to his original offer, the manager, by refusing to play the game, ended up paying more than twice as much and managed to provoke industrial action as well.

So the first lesson is to stick to the rules: understand what you need to offer and then don't offer more without getting something in return.

Now, the negotiating "game" isn't always about confrontation across a table. In the early 1960s, Ronald Reagan was president of the Screen Actors Guild and managed to negotiate a vastly improved deal that allowed film actors to benefit from future revenues, rather than just being paid once. There's a story that one particular deadlock was broken after a break in the meeting found Reagan and one of the studio bosses together in the men's room. They had an off-the-record conversation about what each side really wanted which allowed them to move things on when they resumed. So there's another principle here: a friendly conversation is usually more productive than a public confrontation and professional negotiators do this sort of thing all the time.

The key point about negotiation is that it's to do with finding compromises and not about winning a fight. You have to concern yourself with what the other side wants, even though they may not state it explicitly. If one side has unstoppable power that the other has to give in to, then it's not a negotiation at all.

You might hear a politician, business leader or trade unionist saying, "We won't give an inch in these coming negotiations". Then you'll know that, if they're professionals, they don't really mean that because negotiation can't proceed on that basis - so it's just gamesmanship or bluffing for the sake of appearances.

In the recent European Union talks, David Cameron's biggest problem (apart from his colleagues back home) was in finding reasons for the other parties to concede his demands. There seemed to be nothing in it for any of them. On the contrary, some of them would pay a price in their own countries if the requested changes were made. We don't yet know what, if anything, was offered to each of the individual leaders. And in the end, perhaps the main incentive for agreeing was to get the matter settled quickly with the best chance of preserving the union. It remains to be seen whether they've achieved that.

There's a view that good negotiators are hard-nosed, ruthless and single-minded - ready to use any trick or threat to win the contest. But I'd say that the real skill in negotiating lies in being able to understand what the other party wants and in finding a fair way of giving them that (or most of it) in return for what you want. Threats and trickery might win today, but just wait until you need something from them!