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Take a look at this summary of the article When Winning Is Everything by Deepak Malhotra, Gillian Ku, and J. Keith Murnighan, now available online here as well as in the May '08 Harvard Business Review.

Malhotra and colleagues suggest that an adrenaline-fueled emotional state [which they] call  competitive arousal, often leads to bad decisions.

Negotiating litigators may want to note that all of the conditions giving rise to "competitive arousal" are the day-to-day conditions in which litigation is conducted, i.e., intense rivalry, especially in the form of one-on-one competitions; time pressure . . . ; and being in the spotlight—that is, working in the presence of an audience.

Sound familiar?  Take a look at the consequences and the potential solutions below. 

Individually, these factors can seriously impair managerial decision making; together, their consequences can be dire, as evidenced by many high-profile business disasters. It's not possible to avoid destructive competitions and bidding wars completely.

But managers can help prevent competitive arousal by anticipating potentially harmful competitive dynamics and then restructuring the deal-making process. They can also stop irrational competitive behavior from escalating by addressing the causes of competitive arousal.

When rivalry is intense, for instance, managers can

• limit the roles of those who feel it most
• reduce time pressure by extending or eliminating arbitrary deadlines
• deflect the spotlight by spreading the responsibility for critical competitive decisions among team members.

Decision makers will be most successful when they focus on winning contests in which they have a real advantage—and take a step back from those in which winning exacts too high a cost.

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Recently, I excerpted the expressed concerns of in-house counsel about ineffective mediators.   Among the complaints was some mediators' refusal to see or acknowledge the other side's "irrationality" As Where's the Magic from the U.K. online Mediator Magazine noted:

It can be frustrating where they [the mediator] can see the irrationality of the other party, how their claims and positions are unsubstantiated, and choose to ignore it,' says Frank Aghovia, legal adviser at Exel Plc. He continues, 'It's like saying, "I know he's talking out of his backside, but can you give him what he wants anyway." He concludes that 'steadfast neutrality is irritating and wastes time.'

Reality-Testing

Helping litigants and their attorneys reassess their case is one of the mediator's greatest challenges.  The mediator intervenes only after the parties' dispute has reached stalemate.  Each party to a stalemate has negative attitudes about his adversary that are maintained and prolonged by three psychological mechanisms: selective perception, self-fulfilling prophecy, and autistic hostility.

Selective perception:  people tend to select those perceptions that tend to confirm their existing attitudes, and ignore or discount information that would disconfirm their existing attitudes.

Self-fulfilling prophecies:  people with negative attitudes about their adversary engage in conduct that provokes the adversary's "expected" response, which confirms the party's original expectation, and a vicious cycle ensues.

Autistic hostility:  Parties in litigation have stopped talking with one another about their dispute, communicating only through their attorneys.  The social scientists would say that such people are "stuck in autistic hostility, that is, their hostility is perpetuated by their refusal to communicate."

(for a full discussion of these and other conflict dynamics see CR Info's Book Summary of Social Conflict: Escalation, Stalemate and Settlement by Dean G. Pruitt and Jeffrey Z. Rubin). 

When the parties are in this frame of mind -- particularly after years of highly contentious litigation -- they genuinely believe that the other side is either completely irrational or downright evil.

So how does the mediator reality test in this climate of anger and distrust while continuing to maintain his ability to work effectively with both parties.  

Peter Robinson, co-director of the prestigious Straus Institute of Conflict Resolution in Malibu, California, tackles this problem by way of a hypothetical.  He assumes that one side believes his adversary came here from another planet via UFO.  What should a mediator -- who needs to retain the trust and confidence of both sides -- do?  

Robinson answers his own rhetorical question in this fashion:

When talking to the UFO-guy, I am totally with him.  Listening, asking questions, trying to understand whether his delusion actually has some hidden meaning that might suggest a way to resolve the dispute without asking the other party to "buy in" to the UFO story.

After giving Mr. UFO an opportunity to have his say and to experience -- perhaps for the first time ever -- another human being's willingness to temporarily suspend his disbelief -- I begin to gently "reality test."  To do so, I do not have to doubt Mr. UFO's story.  I can suggest, however, that not everyone is as understanding as I am. 

"Have you told this story to many people?" I might ask.  "And what has their response been?"  Do you have any reason to believe that a judge or jury might be more likely to believe this narrative of events more than, say, your mother, sister, cousin, wife, best friend, etc. were?

Robinson's suggested action between the rock of understanding and the hard place of consensual reality is shrewd and effective.  It neatly avoids the problem recently raised by my friend and colleague Jeff Kichaven who has likened piling rationales atop one another for the purpose of changing another's mind to raising your voice for the purpose of communicating with a deaf man.   

Harvard Business School professors Deepak Malhotra and Max H. Bazerman address the irrationality problem in another fashion in their tremendously useful book Negotiation Genius. 

"Whenever our students or clients tell us about their 'irrational' or 'crazy' counterparts," they write, "we work with them to carefully consider whether the other side is truly irrational.  Almost always, the answer is no."

Malhotra and Bazerman list the mistakes that lead us to call our negotiating partners "nuts," "delusional" or "evil" as follows:

Mistake No. 1:  They are Not Delusional, They are Uninformed. 

If you can educate or inform your bargaining partner, say Malhotra and Bazerman

about their true interests, the consequences of their actions, the strength of your BATNA, and so on - there is a strong likelihood they will make better decisions . . . [I]f someone says "no" to an offer that you know is in her best interest, do not assume she is irrational.  Instead, work to ensure that she understands why the offer is in her best interest.  She may simply have misunderstood or ignored a crucial piece of information.

Mistake No. 2:  They are Not Irrational; They Have Hidden Constraints

In negotiation, a wide variety of possible constraints exist.  The other side may be constrained by advice from her lawyers, by the fear of setting a dangerous precedent, by promises she has made to other parties [this is a particularly common constraint in IP infringement actions] by time pressure and so on.  [D]iscover these constraints . . . and . . help other parties overcome them . . . rather than dismissing others as irrational.

Mistake No. 3:  They are Not Irrational; They Have Hidden Interests

[P]eople will sometimes reject your offer because they think it is unfair, because they don't like you [or are tired of feeling as if you don't like them] or for other reasons that have nothing to do with the obvious merits of your proposal.  These people are not irrational; they are simply fulfilling needs and interests that you may not fully appreciate.  .  .  [I]nvestigate:  "What might be motivating her to act this way?  What are all of her interests?"

But What if They Really Are Irrational

If your counterpart truly is irrational -- in other words, he is determined to work against what is in his best interest -- then your options will be fewer.  You can try to push through an agreement despite his irrationality, you can try to "go around him" by negotiating with someone else with authority who seems more willing to listen to reasons . . . or you may decide to pursue your BATNA because his irrationality has eliminated all hope of creating value.

I have a friend who is, literally,  a rocket scientist.  He says that there are no problems which cannot be solved -- only problems that we don't yet understand.  This is as true in negotiation as it is in rocket science.  In both cases, the wisest course is to assume you know nothing and begin asking the type of questions that would help learn something.

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Thanks to Geoff Sharp at mediator blah blah for directing us to this great U.K. Mediation resource, The Mediator Magazine which is great to poke around in a little when you're home for mother's day and mom's gone off to bed.  Here, for instance, are some well taken criticisms of mediation practice by in-house counsel from the article Where's the Magic?

Top of the list of issues which invite scorn is perceived weakness on the part of the mediator. Giving palpable nonsense and well documented fact equal air-time in the interests of appearing open-minded has backfired for a number of mediators. 'It can be frustrating where they [the mediator] can see the irrationality of the other party, how their claims and positions are unsubstantiated, and choose to ignore it,' says Frank Aghovia, legal adviser at Exel Plc. He continues, 'It's like saying, "I know he's talking out of his backside, but can you give him what he wants anyway." He concludes that 'steadfast neutrality is irritating and wastes time.'

One public sector lawyer, though generally more favourably disposed towards mediation, shares a sense of frustration with the purely facilitative model: 'If a mediator is too passive,' he says, 'there isn't going to be any realignment of expectations, there isn't going to be the refocusing of the parties on the strengths and weaknesses of their own and the other party's case. It's simply not going to happen. You're not going to facilitate the movement.'

Naturally it is all a question of degree, but frustration with a style perceived to be 'slow', 'wet', 'namby-pamby', or worse, 'like therapy' is real, and stands in the way of mediation increasing its meagre market share.

It is also evident that some mediators have failed to manage the process with sufficient vigour, fuelling comments like 'I've been at quite a few [mediations] and question what the mediator actually does.' No doubt they've had to spend all their time working with the other side, but if so, this needs to be communicated.

This lack of robustness which for many is synonymous with mediation has bred the widespread belief that mediation only works when both sides want to mediate. And where that's the case, without prejudice discussions will do the job. Until mediation's image hardens to the point where people realise that great mediators can deal with the shirty, dismissive and gratuitously rude types, mediation will remain in the shadows. . . .

These criticisms are real and require attention.  I'm uncertain of the state of "professional" mediation in the U.K., but here in California, its all over the board.  For the mediation advocate and his client, finding the right mediator for the right case at the right time is not only more art than science, it's often more guesswork than art. 

I'll be dealing with the issues raised by this U.K. article in the coming weeks.  For the full article, click on the link above.

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From Women on the Web's Conversation Today Cokie Roberts: 'Hillary Is Negotiating Her Withdrawal' with Lesley Stahl © AP A Q&A with ABC News correspondent Cokie Roberts.  Excerpt below:

LESLEY: Let’s talk about Hillary. I’m wondering, how do you explain her unwillingness, at this point, to throw in the towel? Does she really think she has a shot at winning this? Is she addicted to campaigning, which is my favorite possibility here. She’s kind of unable to give it up. Does she think there’s another shoe to drop with Obama? What do you think?

COKIE: I think that she is taking a somewhat graceful and prolonged exit. You know, when you’ve been running this hard and have won this much, you don’t just go. And the truth is, when you’re this significant a candidate you negotiate a withdrawal. It’s almost like a plea bargain. You start talking about paying off debt and about convention roles. There are all kinds of things that have to be negotiated. But I also do think that she feels strongly that she is the better candidate — and you can make a good case of that given the way the votes played out in these primaries and caucuses — and that by staying in until it’s over, perhaps something will happen.

Whoever leaves the primary race -- Hillary or Barack -- we will see grace and a spirit of unity under pressure.  Which is how each one of us wants to leave every loss, knowing another door to public service will always be open for men and women of talent, judgment, amibition, character, diligence and courage.

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I shouldn't be talking about collaboration and reciprocity without penning a short note of gratitude for the benefits bestowed upon me and my readers by the new Forbes.com Business and Financial Network.  

The BFNetwork has not only introduced me to many business blogs that otherwise wouldn't have come to my attention, my narcissistic perusal of my own posts listed there have drawn me into abundant Forbes.com resources that benefit my readers.  

I urge my fellow Forbes BFN Bloggers to poke around Forbe's  pages to unearth riches that can benefit their readers there.    

(right:  Forbes.com staff writer Tara Weiss)

That ridiculously lengthy introduction out of the way, here's a great article on how to negotiate a higher salary during a recession from Forbes.com staff writer Tara Weiss -- How to Ask  For A Raise When Times Are Hard.  Summary below:

• find out what people in your market and your position are making.
• once you know your market value, request a conversation with your manager about salary
• remind your manager of the strong contributions you've made.
• during an economic downturn, highlight new clients you've brought to the firm and cost-saving measures you've enacted. Include the key projects you've completed and goals you've met.
• prove you're vital to getting the company through a recession
• present your manager with the research you collected on what others in your market are making.
• consider perks outside of salary such as vacation time, health benefits, or reimbursement for commuting and professional training in a job-related skill.
• if you're rejected, ask what you can do in the next six months to make this conversation successful the next time. 

Thanks Tara!

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Today's New York Times (Questions of Rent Tactics by Private Equity) reports that investment firms have been purchasing New York City rental properties for the avowed purpose of "turning over 20 percent to 30 percent of the units, five times the typical vacancy rate," to upgrade the rentals up and out of rent regulation, generating tens of millions of dollars of income for the investors.    

Tenants are complaining that the investment firms' tactics to "turn over" those units (i.e., evict low-income residents from their homes) are not only ruthless, but fraudulent as well.  See the full article here.

So what's the little guy to do when BigBusiness decides to set aside ethics to maximize profit?  What individuals have always done when their survival is threatened.  Organize.  According to John Medina, author of Brain Rules, there's more than one way to be the fittest survivor and collaboration has always been our species' strategy.  

"Suppose you are not the biggest person on the block," Medina writes,

but you have thousands of years to become one.  What do you do?  If you are an animal, the most straightforward approach is becoming physically bigger, like the alpha male in a dog pack, with selection favoring muscle and bone.  But there is another way to double your biomass.  It's not by creating a body, but by creating an ally.  If you could establish cooperative agreements with some of your neighbors, you could double your power even if you did not personally double your strength. 

Trying to fight off a woolly mammoth?  Alone, and the fight might look like Bambi vs. Godzilla.  Two or three of you, however, coordinating your behaviors and establishing the concept of 'teamwork,' and you present a formidable challenge:  You can figure out how to compel the mammoth to tumble over a cliff.  There is ample evidence that his is exactly what we did

Locating and deploying likely allies is not only good sense when the individual has no bargaining power -- like NYC's low-income tenants -- it's also an extremely savvy move for business negotiators.  As Lax and Sebenius explain in their ground-breaking book 3-D Negotiation

[w]here one-dimensional negotiators mainly focus on actions at the table, [the] third dimension, “setup,” extends to actions away from the table that shape and re-shape the situation to advantage. In deal after deal we’ve seen the same result: once the parties and issues are fixed, and once the negotiating table has otherwise been set, much of the game has already been played.

Therefore, before even showing up at the conference room, 3-D Negotiators take the initiative. They act away from the table to set up the most promising possible situation, ready for tactical interplay. This means ensuring that the right parties have been approached, in the right sequence, to deal with the right issues, that engage the right set of interests, at the right table or tables, at the right time, under the right expectations, and facing the right consequences of walking away if there is no deal.

If the setup at the table isn’t promising, this calls for moves to re-set it more favorably. As we’ll show you, a superior setup plus the right tactics can yield remarkable results that would be unattainable by purely tactical means, however skillful.

See the 3-D Negotiation strategy summarized in the online introduction here.

You don't need to grow larger, richer, stronger or even smarter to gain a bargaining advantage.  If you find the right allies, before you know it, you'll be roasting that woolly mammoth over charcoal briquettes in your own backyard.   

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Thanks to Commitment Matters:  Negotiation Practices in the Commodity World for pointing us to the U.K. Telegraph's provocative article Supermarkets & suppliers: Inside the price war by Jonathan Sibun and James Hall, discussing ruthless negotiation techniques employed by the big supermarket chains in the U.K.  -- like the "Flaming Lamborghini" described below.

My only response is this -- winning at any price isn't worth the price.  Whether you see your customer again makes little difference.  Tomorrow morning, it's your face in the mirror you're required to take a hard look at.  My suspicion?  The "bosses" who direct their staff to negotiate in this manner couldn't or wouldn't do it themselves and those who are doing it are either suffering wage slaves or sociopaths.   

The Flaming Lamborghini

Thought to derive its name from the restaurant in which it was coined - the same London eatery frequented by the infamous Flaming Ferrari City bankers - the Lamborghini is believed to be the model used by Tesco.

The Flaming Lamborghini is a grid-based negotiating tool in which the supermarket buyer takes the supplier on an emotional and psychological roller-coaster ride.

This is done be flip-flopping the salesperson between ‘complacency' and ‘war'.

One minute the buyer is their best friend, the next their worst enemy. This is essentially the clock-face model writ small.

The goal for the supermarket buyer is to make the suppliers feel that they are at the point of ‘maximum performance', while secretly making sure they don't stay there.

A Tesco spokesman said he was unfamiliar with the technique.

For the full article, click here. 

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If you need help Negotiating the Minefields of Electronic Discovery, you have my complete sympathy.  I hope this article by Stephen D. Williger, Esq.and Robin M. Wilson, Esq. from 10 RICH. J.L. & TECH. 52 (2004) helps. 

And if you're the client -- well, here's a darn good reason for settlement before you embark on searches of the C: drives of every employee you have! 

Entire article embedded below

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Brilliant piece on de-escalating conflict over at Tammy Lenski's Conflict Zen this morning.  Teaser and link below:  

The friendly bailiff unlocked the small courtroom. After telling me to make myself at home, he pointed to a small red button on the wall. “If you need me, just press that button and I’ll be in here faster than you can blink and eye. It’s an emergency button.”

“Ok, thanks,” I replied, and began to unpack my briefcase.

“I mean it,” he said. “Just press the button. Maybe you should set up your chair so you’re near it.”

I gave him a long look. “You seem to want me to know about that button. Is there something else you want to tell me?”

Continue reading here.

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