(for a different view, see The Method to Their Madness at the New York Times)

To assess the wisdom of a strategy to fail, I asked arbitrator and mediator Joshua Javits to weigh in on our series concerning the negotiated resolution of the current federal budget crisis.

In June, I appeared on Minnesota Public Radio with Javits to discuss options for breaking impasse in the Minnesota state legislature over similar budget issues. Javits, the former chairman of the National Mediation Board and current chair of the Grievance Committee of the International Monetary Fund agreed to share his experience and wisdom on the national budget crisis negotiations here with our readers today.

I asked Javits to first suggest an optimal negotiation strategy where one party – here, the GOP – is willing to risk catastrophe in the hope (or fervent belief) that the small government revolution they seek will be worth the short term damage to the economy if the debt ceiling is not raised.  Javits surprised me by mentioning the history of the rise of communism in Russia.

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As sociologist Charles Tilly explained in his book, Why? we fail to persuade when we’re talking past each other and we talk past each other when we’re using a type of reasoning different from that of our bargaining partner. I first heard of Tilly’s work from that great popularizer of social science research, Malcolm Gladwell (Here’s Why) after which I never argued my case or negotiated a deal in the same way again.

But First, Why Reason Giving is a Critical Negotiation Skill

In experiments on reason giving, researchers have found that we are far more likely to persuade people to accommodate us if we give them a reason to do so even if the reason makes no sense whatsoever. In one experiment, students were asked to cut in line at Kinkos. One group was instructed to give no reason. Another was told to give a good reason (I’m late for class). The last was directed to give an irrational reason (because I want to).

Continue reading here.

A mistake that lawyers sometimes make is failing to ask for what they want.  If they do want an evaluation they can ask for it when they hire the neutral. There are processes variously known as neutral evaluation, non-binding arbitration, or early case assessment which are designed specifically for this purpose.  They can be used independently or they can be combined with mediation.
 
I was once hired to give a neutral evaluation in a commercial real estate case.  The parties told me at the outset that while they were interested in exploring settlement they were really interested in my opinion on the merits.  So we conducted a mediation that included a neutral evaluation.  Not only did this meet their needs, the evaluation was given in a confidential setting and could not be used as evidence if they did not settle.
 
The point is that both parties wanted the process to be evaluative.  It was not a situation where one party was expecting the mediator to be evaluative and the other party wanted the mediator to refrain from doing so.
 
When parties hire a mediator, they need to be of the same mind about the process. Otherwise the result will be like splitting a steak with your partner when one of you likes it rare and the other likes it well done. Somebody is going to get indigestion!

Naivete and Cynicism in Negotiations and Other Competitive Contexts by Chia-Jung Tsay, Lisa L. Shu and the great Max H. Bazerman. Executive Summary from Harvard Working Knowledge below:

In business and in life, it's important to strike a smart balance between naïveté and cynicism. Act too naïvely, and someone is bound to take advantage of you. Skew cynical, and you may miss out on new opportunities with good people. This paper discusses the decision errors inherent in leaning too far in either direction. Research was conducted by Chia-Jung Tsay, Lisa. L. Shu, and Max H. Bazerman of Harvard Business School. Key concepts include:

Naïveté is more than a glut of trust. More broadly, naïve behavior refers to a failure to make the best decision, due to a lack of consideration of other people's strategic and behavioral perspectives. We are likely to make naïve decisions when we don't think through the likely future decisions of other parties. A cynic, on the other hand, may avoid a business transaction due to an assumption that the seller's self-interested motives will be harmful to him or her-even if logic shows that the deal would likely benefit both parties. When people withhold from trusting others, they usually lack opportunities to learn whether their trust would have reaped rewards. But when they offer their trust and are subsequently burned, they learn hard lessons about trust. This unbalanced feedback breeds cynicism.

In laboratory studies, the best negotiators were those who had a tendency to think about the perspectives of others. However, most people lack sufficient perspective-taking ability. The researchers suggest that training mechanisms should be developed to increase that ability.

Full working paper available for download at the link above.

The Davos World Economic Forum

The paucity of women at the Davos Economic Forum despite how rich the ones who attended are as described in this post by Forbes staff writer Louisa Kroll, The Richest Women at Davos.

Women's Davos Wardrobe Dilemmas covered by Moira Forbes as an unfortunate but still critical factor for the display of power necessary to be a player at the World Economic Forum.

A photo gallery of the executive conferences women CEOs love best.

The Continued Assault on the Glass Ceiling

Aman Singh's post on Why So Many Top Women Don't Make it to Executive Leadership.

Jenna Goudreau's Jobs Outlook:Careers Headed for the Trash Pile

Five Reasons Your Boss Wants to Give You a Raise This Year (Gender Neutral)

Negotiating with Mattie Ross of True Grit (Gender Neutral)

Sponsorship, Not Mentorship, Can Greatly Narrow the Wage Gap

Kucinich and the Olive Pit in a World of Injustice (gender neutral)

First You Wake Up, Then You Negotiate (gender neutral)

Jealousy's Underhanded Contribution to the Wage Gap by our Gen-Y blogger Katie Phillips.

Provocative Posts and Articles

Bad Career Advice:Nice Guys (and Girls) Finish Last by Christine Scivicque

Study says Dads Should be Less Involved in Parenting by Forbes Staff Writer Meghan Casserly as well as her terrific article on Sexy News Anchors' Distracting Effect on Viewers who can't seem to recall the news disseminated by these attractive women!

There's lots more over at ForbesWoman but those are the articles and blog posts that caught my own attention this week. Put ForbesWoman on your newsreader whether you're male or female, because it's pretty clear that women's economic power is growing and attention must be paid. 

Thanks to @NeilDenny of Lawyer 1point9  for the head's up.

Over at Harvard Business School's Working Knowledge site there's an excellent article entitled Valuation When Cash Flow Forecasts are Biased.  Executive Summary below.

The valuation of forecasted cash flows can be an inaccurate process, especially when the forecasts are created by optimists who neglect to consider worst-case scenarios. In this paper, Harvard Business School professor Richard S. Ruback has developed methods of valuating forecasted cash flow when the predictions are biased upward. Key concepts include:

Managers often recognize that their cash flow forecasts are too optimistic and boost their discount rates to account for that bias. But that only works if the optimism masks a potential permanent downside.

The common practice of increasing the discount rate to account for optimistic cash flow forecasts can lead to significant valuation errors that increase with the length of the project, the cost of the capital, and the chance of a downside.

When the optimistic cash flow forecasts omit a temporary downside, valuators should adjust the forecast by deflating it and then setting the discount rate equal to the cost of the capital. In other words, the common heuristic of boosting the discount rate to account for optimistic cash flow can lead to a substantial valuation error when the omitted downside isn't permanent.

When the optimistic cash flow forecasts omit a potential permanent downside so that, if it occurs, there is no chance of recovery, valuators should deflate the cash flow forecast and increase the discount rate so that it includes the cost of capital as well as the probability of a downside.

Priming Legal Negotiations is the winner of this week's Golden Asshole Award. /*  

Thanks to the Legal Writing Prof Blog for the head's up.

As I left for work one crisp, sunny April morning, I spotted a five-by-seven printed form on my car’s front windshield. The form’s message proclaimed, in large, bold letters, “youparklikeanasshole.” The form had a checklist of infractions like “two spots, one car,” “that’s a compact?” and “over the painted lines.”The bottom of the printed form said,

Parking is far too limited in our overcrowded streets and parking lots, and you happened to park like an asshole. Go to the above web site to see why someone else thought you parked like an asshole. Don’t be too offended, we all do it one time or another—it just so happens you got caught.

My next-door neighbor, who evidently put the note on my car, listed my infraction as “other” with a follow-up explanation written by hand: “You are parking too close to my garage. It’s hard for me to pull my truck in.” I studied the note for a few moments. I felt my heart start to pound and my whole body became uncomfortably warm. I wadded the note and tossed it. I was angry. When I arrived at work twenty minutes later, I was still angry. I told my co-workers about the note.

They all agreed with me; it was rude and inappropriate.

When I returned home that evening, I visited with neighbors who were not complaining about my parking. I showed them the note, now crumpled and dirty. They, too, became angry. One neighbor suggested exacting revenge on the note’s author by letting the air out of his tires. Another neighbor excitedly suggested something involving Crisco. Although I am a trained mediator, I became giddy about the prospect of getting even.

Perhaps it was a moment of self reflection that led me to question why I was even thinking of revenge. But that written demand evoked intense emotions in me and in my neighbors. We did not care about investigating appropriate responses or attempting to resolve the problem; we wanted to make my neighbor pay for his rude behavior. Instead of encouraging me to change my behavior in the way my neighbor requested, the note had an entirely different effect. The written demand prompted me to make my neighbor regret placing that note on my windshield.

This incident led me to question the legal demand letters lawyers write. I wondered if demand letters often evoke similar negative emotional reactions in their recipients. And, if so, do those emotions influence the recipients’ behaviors in ways that hinder settlement?

I'll be providing a template for a negotiation request letter later today.

And all kidding aside, this article should be required reading for every legal writing class in every law school in the country!

Cross-posted at The ABCs of Conflict Resolution Blog.

__________________

*/  The Golden Asshole Award is given once a month to the individual making the greatest contribution to reducing assholishness in the profession.

I have to tell you that I believe every one of our She Negotiates graduates understands and knows how to use the bullet point takeaways from Extreme Negotiations below.  Let me also say it's not enough to read about these techniques ~ you must practice practice practice practice.

Get the Big Picture

• avoid assuming you have all the facts
• avoid assuming the other side is biased but you're not
• avoid assuming the other side's motivations and intentions are obvious and nefarious
• instead, be curious ("help me understand"); humble ("what do I do wrong?") and open-minded ("is there another way to explain this?")

Uncover and Collaborate

• avoid making open-ended offers ("what do you want")
• avoid making unilateral offers ("I'd be willing to . . . "
• avoid simply agreeing to or refusing the other side's demands
• instead ask "why is that important to you?"
• proposed solutions for critique ("here's a possibility - what might be wrong with it?")

Elicit Genuine Buy-in

• avoid threats ("you'd better agree, or else . . . "
• avoid arbitrariness ("I want it because I want it."
• avoid close-mindedness ("under no circumstances will I agree to - or even consider - that proposal"
• instead appeal to fairness ("what should we do?")
• appeal to logic and legitimacy ("I think this makes sense because . . . ")
• consider constituent perspectives ("how can each of us explain this agreement to colleagues?"

Build Trust

• avoid trying to "buy" a good relationship
• avoid offering concessions to repair actual or perceived breaches of trust
• instead explore how a breakdown in trust may have occurred and how to remedy it
• make concessions only if they are a legitimate way to compensate for losses owing to your nonperformance or broken commitments
• treat counterparts with respect, and act in ways that will command theirs.

Focus on process

• avoid acting without gauging how your actions will be perceived and what the response will be
• ignoring the consequences of a given action for future as well as current negotiations
• instead talk about the process ("we seem to be at an impasse; perhaps we should send some more time exploring our respective objectives and constraints."_
• slow down the pace:  ("I'm not ready to agree, but I'd prefer not to walk away either.  I think this warrants further exploration.")
• issue warnings without making threats:  ("unless you're willing to work with me toward a mutually acceptable outcome, I can't afford to spend more time negotiating")

I'll be blogging on each one of these steps in the negotiation process for the next two weeks so stay tuned.

Cross posted at She Negotiates and the ABCs of Conflict Resolution.

• THE ASK - name your price first and to make your first number aggressive but not outlandish
  • you need at least three numbers to negotiate with - high, medium and bottom line
  • start with your high number
  • consider linking your high number to performance contingencies, i.e., if I do X and Y as I've promised, then my total compensation for 2011 will be Q; these performance contingencies can also be tied to the company's performance in 2011.
  • don't give all your reasons for your raise at the same time; you need a good reason for each of your high, medium and bottom line numbers - each round of negotiation requires "a number and a reason"
  • when making concessions, consider trading items of high value to you and low value to your employer, i.e., it doesn't cost your employer anything to let you work from home one or two days a week but it may well save you significant monies over the course of the year in transportation and incidental costs (this is called "log rolling")
  • go to your medium number reluctantly and stress that you are making a concession and expect reciprocity
  • go to your bottom line number only when you've completely run out of options

• PRETEND YOU ARE NEGOTIATING FOR SOMEONE ELSE
  • we women have a particular challenge in negotiating for ourselves because asking for ourselves contravenes gender norms
  • the research shows that we negotiate as effectively as men when we're negotiating for another but not when doing so for ourselves - so make yourself your own client and go out there and get the best deal for her

What does this man have that you don't?

A year-end 2009 salary of $21,340,547 during one of the worst year's in the history of his industry ~ banking.

Listen!  The recession is just another excuse for not paying you what you're worth.

How do we know?

Because the most effective negotiators on the planet ~ corporate CEO's ~ are finding the downturn to be the best time to squeeze every last living dollar out of their employers.

If they can do it, so can you!

 Here's the evidence:

	Bank of America Corp. Thomas Montag 2009 Total Compensation: $29,930,431		JPMorgan Chase & Co. James Dimon 2009 Total Compensation: $9,274,494
	Citigroup Inc. John Havens 2009 Total Compensation: $11,276,454		Morgan Stanley Walid Chammah 2009 Total Compensation: $10,021,969
	The Goldman Sachs Group Inc. Lloyd Blankfein 2009 Total Compensation: $9,862,657		Wells Fargo John Stumpf 2009 Total Compensation: $21,340,547

 Whhaaaaaatttttt? do these men have that you don't have?

• Social networks with rich and powerful people who sit on their Boards of Directors and influence policy makers and Wall Street power brokers
• The self-created illusion that they are "too big to fail" /1
• The persuasive argument that only they, with their unique combination of experience, education, knowledge, savvy, can-do-spirit, and leadership qualities can pull these banks out of the sinkhole of the recession.
• Friends in very high places.
• Chutzpah and shamelessness (not that we'd want to encourage this second character flaw in our readers).
• Self-satisfaction.
• Entitlement.
• An employment history of asking for and receiving increasing levels of compensation based upon their salary negotiations at every career point possible (and every career point impossible)
• the demonstrated ability to produce results (our readers do possess this strength but haven't used it to their greatest advantage yet)
• the tendency to measure their market value by their value in the hands of their employer, not by what they "need" or what they are "worth" according to some internal metric that depends upon how they feel about thier accomplishments.

__________________

1/  This is where collective action comes in.  When we aggregate together America's employees, small business owners and homeowners, we get a non-corporate "entity" that is waaaayyyyyy bigger than some little piss-ant bank and it is we who are too big to fail.

At 8 PM Women on the Move gets down to business with attorney Victoria Pynchon, author of the Settle It Now Negotiation Blog, who has been called a “master of conflict resolution and deposition skills.”

Victoria recently became a regular contributor to Forbes.com’s “On the Docket” column.

You can call in with questions! 

Call-in Number: (347) 857-2102

Here's a piece I missed in April on real litigation filed over virtual property in Second Life.

Architect David Denton spends much of his time on a lush tropical island, where he experiments with cutting-edge building designs and creates spaces for artists to showcase their work.

Never mind that the island only exists in the virtual-reality world of Second Life, a popular online venue where people interact via digital avatars. Denton, 62, said he purchased the island for about $700 — real money, not virtual cash — from its former owner, and considers it his property.

Here's the thought this article triggers.  If 90% of all litigation involving people (I'll skip corporate litigation and litigation brought to vindicate rights such as that declaring Prop 8 unconstitutional) will end with a retired Judge telling the people that litigation is too expensive and a jury trial too uncertain for them to bear, why don't we just litigate virtually (with Linden dollars!) giving the parties the experience of litigation that will eventually drive them to settlement?

I'm sure some smart programmer can come up with an algorithm for most personal disputes, including both factual templates and the application of simple legal principles.  A "ticker" could keep track of the dollars your virtual attorney is billing on your law suit's screen everyday.  Continuances, discovery motions, pre-trial proceedings and depositions could all be simulated.

Then the parties return from the virtual life of Second Life Litigation and sit down in the old fashioned way to negotiate a resolution to their dispute or, if necessary, hire a village elder trained in conflict resolution, sometimes called a mediator, to help them do so.

I asked one of my consulting clients for a testimonial yesterday.

"Anything," she said, "it's genuinely changed the way I do everything.  It's not just the shift in my business relationship with [BigBiz, Inc.].  I dumped a boyfriend last week because of our conversations!  So, seriously, what would you like me to say?"

My client and I, like the few women commercial litigation clients I had during my twenty-five years as a lawyer (2%?) were quickly becoming friends.  And I was proud of her.  Truly proud.  Like a parent would be.

"I'm proud of you," I finally said, even though I'd been thinking it for weeks.  "You've shifted the power in your working relationship and that was difficult to do.  You were persistent.  You're a first class learner.  And you've been brave."

She laughed, the way we women do when we're praised, wanting the moment to pass instead of savoring it a little, particularly when we know deep down we've genuinely achieved something important in our own lives and careers but don't want to appear self-satisfied.

So I said it again.  "I'm really proud of you.  You've done great work and you never gave up.  You didn't fold to the power of BigBiz, Inc.  You stood up for yourself."

This is a powerful woman and she was powerful long before I met her.

Still.  It takes courage.  Don't for a moment believe that it's just you.  Yesterday at my Forbes "On the Docket" blog, I wrote about women lawyers who were angry about being bullied out of their "origination" credit.  "Origination" is the credit you get for bringing clients to the firm and sometimes for keeping them there simply by being damn good lawyers.  They feel initimidated and they're some of the most powerful women in the country.

"It takes courage," I said again to my client.  "Most women think it's them.  They believe they're the only ones who feel inadequate to the task of popping their head into the managing partner's doorway to say, 'I want to talk to you about sharing the origination credit for the work we've done for Major Petroleum Company, Inc.'"  We're all afraid of asking.  Hillary Clinton's afraid of asking.  Sure, Clinton can run for President, but I'd wager a cool thousand that it's not easy for her to ask for a raise."

"And practice," my client offered.

"Oh lord yes, practice," I responded.  "And here's the thing.  We tut-tut and shake our heads over the failure of citizens to confront their governments about genocide.  What were the German people thinking happened to all their Jewish neighbors?  They knew they'd been sent to camps and they knew they were being executed and starved to death.  Why didn't they do something?"

They were frightened.  We're not talking about blowing the whistle on corporate wrong-doing for which we might lose our jobs, disable ourselves from paying the mortgage and encounter long-term unemployment.   Any German who said, "hey, wait a minute - you can't put Jews in camps" was liable to be imprisoned and executed.  Any ordinary citizen who did what Miep Gies did in a effort to save Anne Frank's family put her own life and that of her family at risk."

"That's why we call them heroes and award them metals for bravery and uncommon valor.  If I do not practice standing up for myself and for those who don't have a voice here and now, I won't learn the lessons or develop the strength of character to stand up when the Nazis march into town."

"But my question," my client reminded me laughing.  "What do you want me to say?"

"I want you to say that my consulting transformed your entire life in addition to getting you the business deal you wanted." 

"In your own words, of course."

The next life-altering She Negotiates month-long online coached negotiation class begins on July 19.  That's next week.  When, if ever, will you be more ready to stand up, speak up, and begin to earn what you know you're worth?

Why is three the magic number?

Recent studies have shown that it takes three women corporate board members to avoid the deliterious effects of group think on corporate decision making - my own supposition on the question "why three" being that one or two women easily risk falling into male group-think.  This isn't male bashing, by the way. I assume three men on an otherwise all woman's board would have a similar performance enhancing effect.  

1. Illusion of invulnerability –Creates excessive optimism that encourages taking extreme risks.
2. Collective rationalization – Members discount warnings and do not reconsider their assumptions.
3. Belief in inherent morality – Members believe in the rightness of their cause and therefore ignore the ethical or moral consequences of their decisions.
4. Stereotyped views of out-groups – Negative views of “enemy” make effective responses to conflict seem unnecessary.
5. Direct pressure on dissenters – Members are under pressure not to express arguments against any of the group’s views.
6. Self-censorship – Doubts and deviations from the perceived group consensus are not expressed.
7. Illusion of unanimity – The majority view and judgments are assumed to be unanimous.
8. Self-appointed ‘mindguards’ – Members protect the group and the leader from information that is problematic or contradictory to the group’s cohesiveness, view, and/or decisions.
   

When the above symptoms exist in a group that is trying to make a decision, there is a reasonable chance that groupthink will happen, although it is not necessarily so.  Groupthink occurs when groups are highly cohesive and when they are under considerable pressure to make a quality decision.  When pressures for unanimity seem overwhelming, members are less motivated to realistically appraise the alternative courses of action available to them.  These group pressures lead to carelessness and irrational thinking since groups experiencing groupthink fail to consider all alternatives and seek to maintain unanimity.  Decisions shaped by groupthink have low probability of achieving successful outcomes.

From What is Groupthink  at the Psychologists for Social Responsibility site.

We’re celebrating Mothers Day by posting Blawg Review #263 at the She Negotiates Blog for one obvious and some not so obvious reasons.  The obvious reason is the word “She.”  The not-so-obvious reasons are:  (1) Mother’s Day was a peace and reconciliation movement before it was a holiday; and, (2) peace exists only when we have the political will to seek and the negotiation tools achieve the resolution of conflict.

In addition to the main post, we've also posted Blawg Review #263 on our She Networks, She Succeeds, She Transforms and She Resolves pages (up at the top of the blog).

Today I stumbled over the post Women Deal with Conflict Differently than Men, reporting on a study done by the Program on Negotiation at Harvard in 2008.  Results of the study showed the following similarities between men and women including:

• Integrating, the ability to meet the needs of both parties; and,
• Compromising as a strategy, except women showed a "high level of agreement that every issue has room for negotiation"

The differences included:

• women's tendency to choose equal distributions when compromising which the researchers apparently ascribed to women's greater concern with fairness;
• competitiveness - with men scoring 25% more competitive than their female counterparts
• "smoothing," with women engaging in that behavior 20% more of the time than men - smoothing being defined as "giving in to the other party while ignoring one's own needs"
• avoiding or withdrawing with women doing so 30% more than men
• expressing feeling, with women apparently doing so "more" than men but no percentages are provided

We'll be working with gender differences through the end of the month of March and will likely discuss this data in more detail later.